In previous articles we discussed what undivided co-ownership means, as well as the financing required for these types of properties. Today we will take a brief look at the formalities involved in creating a undivided co-ownership.
How is it formed?
To create an undivided co-ownership you, and the other co-owners, will need to draft a formal “Indivision agreement”, (with the help of a notary, of course) Then this document must be registered and published to be enforceable against third persons.
The agreement may cover the following:
- The term of the agreement (maximum term is 30 years, but can be renewed)
- Rights and obligations of the co-owners, regarding the use of the premises
- The sharing of maintenance and renovation
- The sharing of expenses
- Rules for administering the property
- Rules governing division on termination of the indivision agreement.
- Restrictions on selling.
Restrictions on Selling
When reselling your undivided unit, it’s crucial to know that in some instances, and depending on the indivision agreement, the remaining co-owners have the right to exclude a potential buyer:
“It is important first to take a look at the indivision agreement that governs the relationship between co-owners. These agreements often require that a co-owner offer his share to the other co-owners before offering it to a third party, or provide for the other co-owners to be able to match the third party’s offer for this share, following the terms of the agreement. A seller who decides to ignore these terms exposes himself to legal action and potential liability for damages”. (Source: ACAIQ)
What if a co-owner defaults on their mortgage payments?
This is a question that has been asked many times. We looked into this at 1 800 notaries.ca website and found the following answer:
“The Civil Code of Québec provides that each undivided co-owner may hypothecate his or her share of the property alone. The other co-owners are thus in no way liable should the hypothecary debtor default. The law even gives them special rights”.
That’s it for the undivided co-ownership series. Opinions, corrections and amplifications are encouraged in the comments. If you have questions, need help or simply want an agent to represent you in your purchase, contact us
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Posted by: Deya Bautista - Real Estate Broker working as part of the McGill Immobilier team. Specializing in high end condos in downtown and Old Montreal. For buying or selling contact Deya at: 514.917.7889 
Vos articles sont intéressants mais il y a tellemnt de fautes, de mots manquants ou de trop que je n'arrive pas à comprendre le sens de certaines phrases. C'est domage et je sais que vous travaillez fort pour nous informer gratuitement. Alors je vous remercie, mais je laisse ce commentaire car votre travil se perd, quand l'information n'eat pas claire.
Merci
Dee,
You are probably using the automatic online translator.That\\'s why there are a lot of errors on the page. We have some articles written in French but 90% of this blog is written in English
Great blog. Keep up the good work.
Some questions regarding undivided co-ownership:
- What happens when the term of the agreement is up? Is it automatically renewed? Does it have to be renegotiated?
- Should an agreement already be drafted and registered BEFORE making an offer to purchase?
- Similar to a condo, does an association need to be created and registered for monthly fees to be paid to?
- How does an undivided co-ownership arrangement affect resale value? Does the same rule of 20% down payment apply to the new buyer?
Thanks!
Hi Arty,
Wow, those are some questions you have! Honestly, I cannot answer some of them because I simply don't know for sure. BUT:
The indivision agreement is often done before putting the unit for sale.
An association needs to me created, just like a condo.
It does not affect the resale value, and as far as I know, the same rule of 20%+ down payment apply to the new buyer.
As for the renewal of the agreement, that can be answered by your notary.
Hope this helps
If purchasing a this particular type of condo with the condition of 20% down, how is that paid? Do we give a check to the seller, does that down also count as that against the mortgage? If we take a mortgage from a bank and put their required minimum down, lets say it is less than 20%, now, does the bank give the cash amount to the seller? How does that work when taking a mortgage, is the sale price reduced by the 20%? Thanks.
Stephanie,
The 20% is the same as the cash down for a mortgage. You give 20% and the bank finances the rest (80%). The money isn’t given to the owner but to the notary who will do the transaction. They (the notaries) will coast you through what you have to do and bring to the tables at the signing date.
Hope this was helpful.
If an co-property agreement was never registered but existed for over 2 years is it still valid?
Upon sale can a new agreement be drawn up between the new owner and the rest of the co-prop?
Patrick, I don't think if it wasn't published it will be valid. I can be wrong though.
Please contact your notary for these types of questions.
nice post