Types of Ownership

Apartments & Townhouses  

WHETHER YOU BY AN APARTMENT, TOWNHOUSE OR 1/2 DUPLEX THERE ARE FUNDAMENTAL DIFFERENCES BETWEEN THE FOLLOWING TYPES OF OWNERSHIP.

A. Strata Lot 

An individual purchaser of a strata lot will receive a fee simple estate in his/her particular unit and also a proportional share in the common property.

B. Co-Operattitve Ownership 

Normally what occures is that a company is incorporated and it, in turn, buys a building.  A buyer in a co-operative corporation becomes a shareholder of the company which owns the building.  In typical cases, the shares entitle the buyer to a  long-term lease on a particular unit.

C. Leasehold Ownerhsip 

Leases are normally held with  First Nations People or by the City, at some time in the future the lease will expire.  While a term such as 99 years may not dramatically affect those that buy when the building is first offered to the market, as the term dwindles, the value of an interest will lessen.  You will never own the land.

D. Undivided Interest

Registered title to the land and building is separated into fractional interests.  The size of each interest is determined by the square footage of the apartment.  A Buyer’s interest has two components - a "land interest" and a "contractual" interest.  The "contractual" interest is a contract among all persons who are registered owners of the "land" interests.  The registered "land" interest and the contract with the other co-owners define the "bundle" of benefits and obligations which buyers acquire when they purchase an interest.

E. Life Lease 

This lease is a type of ownerhsip for seniors.  The typical arrangement involves a non-profit service club (i.e. Legion) or church sponsoring the construction of an apartment-style building that will be eventually leased to person 55 years or older.  From the sponsor, who acts as landlord, tenants (owners) meeting the age requirement purchase the right to live in a unit until they terminate the lease or die.

At that time, they or their estates are entitled to refunds of some or all of the original purchase price, or the opportunity to share in any increase in price depending upon the terms of their leases.  The rationale for not sharing in an increase in price is that the tenenats paid below market prices for their unit due to the sponors’s donation of land or other resources.

TAKE NOTE:  Buyers who think they are getting a "deal" when they purchase a co-op, leasehold or undivided interest should investigate further.  While you may be able to purchase one of these types of ownership at a far cheaper price than a strata titled property, especially on a square footage basis, thte "bundle of rights" you are aquiring is FAR LESS.

Depending on your area, you my have a great deal of difficulty selling one of these types of properties in the future, especially in a buyer’s market.  Further, some financial institutions will not finance loans on co-ops, fractional interest holdings or life leases.  These types of ownership are cheaper for a reason - they are usually less desirable and few buyers want them.