Montreal buyers oftentimes come across the perfect home with a lower price tag and lower annual expenses. Very excitedly they set up a visit. But once they hear “undivided co-ownership” or “co-op” they wonder if undivided condos are a safe purchase in Montreal? Most people are afraid of the undivided property because they don’t understand what it is. In most ways, undivided co-ownership is similar to divided condos when it comes to your day to day living. Buying or selling an undivided unit is where you will feel all the difference.
Here are the main differences between divided and undivided condos:
| Divided Condos | Undivided Condos |
| Owners owns 100% of their unit and a percentage of all common portions (hallways, lobby, land etc.) of the building | Owners owns a percentage of the whole building. For example, in a building with 10 condos in it, the buyer would probably own close to 10% of this building. |
| Each owner receives a tax bill pertaining to their specific unit. | Owners share responsibility for realty taxes of this building. Typically taxes will be less in this case since there is only one tax bill as opposed to 10 different ones for 10 different units. |
| Most banks will finance | Only 2 banks finance since these units are special to Quebec only |
| Minimum downpayment: 5% | Minimum downpayment: 20% |
With regards to the 20% downpayment for undivided units, there are pros and cons:
- Pros: Because there are less people with 20% downpayment, you may find a cheaper unit.
- Cons: You will have to sell for a cheaper price when you sell. But if you paid less for the home, it will even out. After all, your profitability is measured as a percentage return. Undivided condos will not increase at a slower rate than divided condos.
Other financing concerns
In recent years, and only in certain undivided buildings, we have seen in Montreal that financing is no longer an option. For these buildings, most who fall in love with an undivided unit, buy mortgage free.
When a bank agrees mortgage an undivided unit, they may restrict the buyer’s right to lease the unit. For this reason, undivided units may not be the ideal property to buy for rental income.
You still may be wondering if undivided condos are a safe purchase in Montreal. No undivided owner-occupant is living day-to-day, feeling any different than a divided condo owner. The undivided condo only has a few different steps when it comes to buying or selling the unit. Usually the buyer cannot choose their own notary or mortgage broker in the case of an undivided condo. Although each type comes with pros and cons either way, there are more similarities between them than there are differences.
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