What kind of home do you want?
Consumers are constantly barraged by media displays of many different kinds of home ownership opportunities. Most people though, do not really understand what options are out there. This article will attempt to provide an overview of the three main types of ownership available today – whether in a new home or resale.
Condominium Ownership: We all think of condos as high-rise apartments. This is no longer true. Condos come in all shapes, sizes and heights. They can include townhouses, semi-detached or detached units, and can be industrial, commercial or residential. Condos can also take the form of common element condos (i.e. a number of homeowners sharing a swimming pool, a common road or park), phased condo corporations, vacant land condos or leasehold condos . Condos are created under the Condominium Act of Ontario as, among other things, a means of consumer protection by the imposition of certain time and disclosure requirements on the purchase and sale of new condos and as a means of sharing common costs.
In a condo, you will pay a monthly fee that includes everything from contributions to a reserve fund, taxes and insurance, to heat, hydro, television and maintenance. This amount can vary from year to year as the cost of running the building increases or decreases. In a condo, you individually own your unit by deed. You jointly own, through your proportionate share, the common elements (pools, tennis courts, hallways, elevators, etc.). The operation of your condo is carried out by an elected board of directors who operate the condo corporation. 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.
Condo purchase is protected and regulated under the Condominium Act of Ontario. Two of the big protections you should be aware of that do not apply to the other forms of ownership are the “10-day cooling-off period” and “excess deposit protection.”
Sec. 73(2) of the Condominium Act says that you may rescind the Agreement provided you give notice to the Builder within 10 days of the later of receipt of the Disclosure statement, and the date you receive a copy of the Agreement of Purchase and Sale, signed by the Builder. In other words, all you have to do is send a letter to the Builder within the 10 days saying, “I rescind my offer,” and the Builder will cancel the deal and refund your deposit. Deposits are protected by Tarion (the new home warranty plan) up to $20,000.
Everything after that is protected if it is paid to the Builder’s lawyers. These two protections are not available through other forms of home ownership.
Co-operative Ownership: Another form of ownership available is buying into a “Co-op.” Co-ops cannot be looked at in the same way, as there is no real direct real estate ownership. In this circumstance, a corporation or trustee owns the property and 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 condo in the sense that a board of directors, elected by the co-operative members, decides on how the facility will operate.
The monthly fees, however, may include the cost of the underlying blanket mortgage and other costs (a blanket mortgage is the mortgage covering or blanketing the entire property, used originally to build the building).
Freehold Ownership: This is generally the way that our parents and grandparents purchased their homes. This is the old fashioned “my home is my castle” concept. You are the king or queen of your domain, and what you do with your property is your choice. Insurance, heat, hydro, property tax, maintenance, etc., are your personal responsibility – you deal with them as you deem necessary. This is called ownership in fee simple, and the land and structure are yours; everything related thereto, your responsibility. In other words you cut your own grass and take out your own garbage.
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Contact the Jeffrey Team for more information
