Co-ownership buildings are a unique and often misunderstood form of property ownership in Toronto. They offer a lifestyle that feels very similar to condo living, but the legal ownership structure, financing and resale process work differently.
Co-ownership units can be an appealing option for buyers who want more space in an established Toronto neighbourhood at a lower price than many comparable condos. However, they are not the right fit for everyone.
Where Are Co-Ownership Buildings Found in Toronto?
You’ll mostly find co-ownership buildings in older areas of Toronto, particularly in midtown neighbourhoods such as Yonge and St. Clair, Forest Hill and South Rosedale.
Many of these buildings were constructed during the 1950s and 1960s. From the outside, they often resemble traditional rental apartment buildings, but the individual apartments are occupied or rented out by co-owners.
How Does Co-Ownership Work?
When you buy a condominium, you receive legal title to a specific unit along with an interest in the building’s common elements.
With a co-ownership, you purchase an undivided percentage interest in the entire property rather than owning one legally separate unit. Your co-ownership agreement then gives you the exclusive right to occupy a particular apartment and, where applicable, use a designated parking space or locker.
Your ownership interest is registered on title along with the ownership interests of the building’s other co-owners.
This is an important difference between a co-ownership and a co-operative, or co-op. In a co-op, you generally purchase shares in a corporation that owns the building. In a co-ownership, you hold a registered percentage interest in the property itself.
Can You Sell or Rent a Co-Ownership Unit?
In many Toronto co-ownership buildings, owners can sell or rent their apartments on the open market without needing approval from the other owners or the building’s board.
However, the building’s co-ownership agreement can contain its own rules and restrictions. Buyers should have an experienced real estate lawyer review the agreement before purchasing to confirm the rules surrounding sales, rentals, renovations, pets and the use of the property.
Major renovations will generally require approval, particularly when the work may affect plumbing, electrical systems, structural components or other parts of the shared building. This is similar to condo ownership, where renovations are also subject to the condominium’s declaration, rules and approval process.
How Is a Co-Ownership Unit Financed?
Financing a co-ownership apartment can be more complicated than financing a traditional condominium.
Because the buyer is purchasing an undivided interest in the entire property rather than a separately titled condo unit, many mainstream lenders do not offer financing for co-ownership purchases. Buyers normally need to work with a lender or mortgage professional that has experience with this specific ownership structure.
The financing may still be structured as a mortgage registered against the buyer’s ownership interest, but the lender’s requirements can differ from those for a traditional condo mortgage.
Depending on the building, lender and buyer’s financial profile, the purchaser will likely need a down payment of at least 20%, and sometimes considerably more. Interest rates and qualification requirements may also differ.
Before making an offer, buyers should confirm both that they qualify for financing and that the lender is willing to finance the specific co-ownership building. Some lenders review each building and its governing documents before approving financing.
Benefits of Buying a Co-Ownership Apartment in Toronto
1. A Lower Purchase Price
Co-ownership units are often priced lower than comparable condos in the same neighbourhood.
This can allow buyers to live in an established central Toronto location that may otherwise be outside their budget. However, the lower purchase price needs to be considered alongside the larger down payment that may be required.
2. Property Taxes May Be Included in the Monthly Fees
Property taxes are commonly collected as part of the building’s monthly fees rather than billed separately to each owner by the City of Toronto.
This can make monthly budgeting simpler, although buyers should carefully review what is included when comparing co-ownership fees with condo maintenance fees.
3. Larger Living Spaces
Because most Toronto co-ownership buildings are older, their units are often considerably larger than units found in newer condo developments.
They may offer more generous bedrooms, separate kitchens, proper dining rooms and better storage. For buyers who prioritize living space over modern amenities, this can be a major advantage.
4. A Community-Oriented Environment
Co-ownership buildings are often smaller and have more long-term residents than large condo towers. This can create a stronger sense of community among neighbours.
Many are also well maintained, particularly when the owners are actively involved in the operation and long-term care of the property.
Drawbacks of Buying a Co-Ownership Unit
1. Financing Is More Limited
The smaller number of lenders is one of the most important considerations.
A buyer who would qualify for a traditional condo mortgage may still have difficulty obtaining financing for a co-ownership. This can also affect the future resale process because your eventual buyer will face the same financing limitations.
2. The Buyer Pool Is Smaller
Co-ownership units are less familiar to the general public, and some buyers are uncomfortable with an ownership structure they do not fully understand.
Combined with the financing limitations, this can make a co-ownership apartment more difficult or slower to sell than a comparable condo.
3. Appreciation May Be More Limited
A co-ownership may not appreciate at the same rate as a traditional condominium in the same area. This is not guaranteed and will depend on the individual building, unit, neighbourhood and market conditions.
However, limited financing and a smaller buyer pool can place additional pressure on resale values. Buyers whose main goal is maximizing long-term appreciation should carefully compare the co-ownership with other property types.
4. Fewer Amenities and Modest Common Areas
Many co-ownership buildings have few amenities, if any. You may not find a concierge, gym, pool, rooftop terrace or elaborate party room.
The lobbies and hallways can also be more modest or dated than those in newer condo buildings. For some buyers, this is a worthwhile trade-off for a larger unit and lower purchase price. For others, the building experience and amenities are an important part of condo living.
What Should You Review Before Buying a Co-Ownership?
Before purchasing a co-ownership unit in Toronto, buyers should carefully review:
- The co-ownership agreement
- The building’s financial statements and budget
- Monthly fees and what they include
- Property tax arrangements
- Rules concerning rentals, pets and renovations
- Planned repairs and possible additional expenses
- Available financing for the specific building
- Insurance requirements
- Parking and locker rights
- The exact percentage of the property being purchased
This is not a typical condo transaction. It is important to work with a real estate agent, lawyer and mortgage professional who understand co-ownership properties and can identify potential concerns before your purchase becomes firm.
Is a Co-Ownership Unit Right for You?
A co-ownership unit may be worth considering if your priority is getting more space in a desirable Toronto neighbourhood for less than the cost of a comparable condo.
However, the lower purchase price does not automatically make it the better option. You need to consider the financing requirements, future resale market, building condition, monthly expenses and legal agreement.
If you’re curious about Toronto co-ownership units and whether one could be the right fit for you, feel free to reach out. I’d be happy to walk you through the ownership structure, connect you with the appropriate professionals and help you make an informed decision.
