Common Forms of Ownership
Buying a home is the most important financial commitment most of us will make in our lives. Today’s column will deal with the first step to be taken before making an offer to buy a home.
Ok, where do I start? The first thing to decide is what kind of real estate do I want?
There are basically 3 common kinds of ownership in Ontario and they are as follows: Condominium, Freehold and Co-op.
Condominiums are created and regulated by the Condominium Act. In a condominium you will pay a monthly fee that includes everything from contributions to a reserve fund, taxes, insurance, heat, hydro, television and maintenance. This amount can vary from year to year as the cost of running the building increases or decreases. The operation of your condominium is carried out by an elected board of directors who operate the condominium corporation and these people decide on how things will run. As an example there may be bylaws or rules setting out the fact that there can be no pets in the units. Condominiums can come in all shapes and sizes from apartments to townhouses to grouped single-family dwellings. You individually own your unit by deed and jointly through your proportionate share, the common elements (pools, tennis courts, hallways, elevators, etc.).
Co-operative ownership cannot be looked at in the same way, as condominium as there is no real direct real estate ownership. In this circumstance a corporation or trustee owns the property and in effect you buy a share. You live in your unit, in effect as a tenant, generally with a lease or license for exclusive possession. It runs similarly to a condominium in the sense that a board of directors elected by the co-operative members decide on how the facility will operate. The monthly fees however may include the cost of the underlying blanket mortgage and other costs.
In your Freehold home, insurance, heat, hydro, maintenance, etc. are your personal responsibility and you deal with them, as you deem necessary. You are the King or Queen of your domain and what you do with your property is your choice. This is called ownership in fee simple and the land and structure are yours and everything related thereto, your responsibility. This is the common form of ownership we are all use to.