Divided or undivided co-ownership: Do you know the difference?

Martyne would like to purchase her first co-ownership property. Her friend Katia asks her if the property is held in divided or undivided co-ownership. Martyne does not know the answer and wonders what the difference might be.

Generally speaking, when you are looking to purchase a co-ownership property, one of the first things to check is the type of property: is it held in divided or undivided co-ownership? Both types of co-ownership have their own distinct features. It is important to make sure these suit your needs and expectations.

Here is a brief overview of the main distinctions between both types of co-ownership.

Divided co-ownership

If you purchase a property held in divided co-ownership, you will be buying a private portion (e.g. your apartment, your private parking space), as well as a percentage of the building’s common portions (e.g. hallways, elevator shafts, pool, etc.).

You will be the sole owner of your private portion, and you will share ownership of the common portions with the other co-owners.

In this type of co-ownership, it is possible for a co-owner to have the exclusive use of certain common portions for restricted use (e.g. a patio or balcony). This information must be indicated in the section “Summary description of the immovable” of your brokerage contract.

In a divided co-ownership, your apartment has its own lot number (cadastre). You will also receive your own school and municipal tax bills.

Since this is a divided co-ownership, you will have the right to sell your fraction without consulting the other co-owners. And, if one of your neighbours has a solvency problem, you will not be affected by his mortgage situation.

Another feature of divided co-ownership is the presence of a syndicate of co-owners whose mission is to manage the building.

Undivided co-ownership

If you purchase a property held in undivided co-ownership, you will be buying a percentage of the whole building. The building is owned jointly by several owners.

In an undivided co-ownership, there is no syndicate of co-owners. An indivision agreement is used to administer the rights of all owners and establish the rights of exclusive use assigned to each of them (e.g. your apartment, your private parking space).

An indivision agreement is optional, but usually recommended. It specifies how the co-ownership property works and is managed. The indivision agreement will also indicate whether, when you resell your share, you are free to sell or transfer it to anyone, or whether you must give the right of first refusal to the existing owners. This agreement must be registered in the Quebec Land Register and will be binding on any future buyer.

A property held in undivided co-ownership has only one lot number (cadastre) for the whole property. School and municipal taxes are common to all owners. All expenses relating to the property are assumed by all owners based on their respective share.

Following her friend Katia’s advice, Martyne contacted a real estate professional authorized by the OACIQ and  learned that the property she is interested in is held in divided co-ownership. Excited about this first conversation, Martyne has made an appointment with the broker to make a thorough visit of the property.  To be continued!

Becoming a co-owner gives you certain rights, but also certain obligations. Make sure that you have all the information you need and that you clearly understand all the implications of buying a co-ownership property. The Organisme d'autoréglementation du courtage immobilier du Québec (OACIQ) recommends consulting a duly trained professional who has the specific skills to assist you in the purchase of a co-ownership property.