What is a Co-op?
A "co-operative unit" is the interest of a person in a co-operative corporation that includes the right to use or occupy a part of the land that the co-operative owns or has an interest in. A "co-operative corporation" is essentially any form of incorporated entity, such as a company or society, any partnership or limited partnership that is the owner of the land, where a majority of the persons entitled to occupy the land are or will be the shareholders, owners or partners of the corporate entity, partnership or limited partnership. Thus, an owner of a co-operative unit acquires shares or some other form of ownership in a corporate entity or partnership, which carry the right to occupy only a portion of the land that the co-operative corporation owns. This particular portion is often an apartment or recreational vehicle site.
Sellers are unable to carry primary or secondary financing on co-operatives by way of a mortgage registered against the title or by an Agreement for Sale, as there is no title in a co-operative unit to encumber. It is, therefore, strongly recommended, in a situation where the Seller is asked to carry any financing, that the Seller's lawyer and the Buyer's lawyer be consulted before the acceptance of any offer.
Is a co-op for you?
Let me explain some of their pluses and some of their challenges. They are located in great locations, significantly cheaper than strata properties, low maintenance and taxes (heat is included), usually small and intimate buildings, lovely hardwood throughout, and significantly larger square footage. Usually no Property Purchase tax paid. Well-seen and maintained buildings. Owners remain a very long time.
They will require a 35% down payment. Very limited financing a options are available (HSBC, Prospero, Canadian Western Bank) and expect to pay ½-2% above posted rates. Generally it is safe to say: no children, limited (board approval) for pets, no washer/dryers en suite (shared laundry), and no rentals, limited parking is available and participation required!!
The majority of co-ops are walk-ups (no elevator), and are of a wood frame construction. They will usually have no balconies. Should the co-op you choose to have a balcony, elevator, and view, these will be at the upper end of the scale.
Registered vs Non-Registered
Registered means the title is registered with the province. Banks like these type of co-op buildings. Property Purchase tax will be paid.
Non-Registered: no Property Purchase tax, however, title must be shown from inception (not a big issue).
If you have any questions about Buying a co-op or Selling a co-op in Vancouver's West End don't hesitate to contact us.