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“I thought Co-ops were subsidized Housing, can I buy a Co-op apartment?”
Relative to the number of Strata titled properties, there are not many Co-ops in the Lower Mainland, but when they appear on the market, the buildings tend to be very well maintained, the units are a generous size and the price is often very attractive.
The term “Co-op” can be used to describe subsidized housing, or cooperative housing. However, Apartment Corporations are also referred to as “Co-ops”. These Co-ops are essentially corporations that own land. The shareholders of the corporation own shares associated with specific units in the building. So, an owner of a Co-op doesn’t actually own any land, they own shares in a corporation.
So how is buying a Co-op different than buying a regular strata titled property? Well it depends. Because these co-ops are corporations, every one is different with their own systems and processes. In some Co-ops, Property Transfer Tax (PTT) will never be payable and in others PTT will be payable on every transfer. It just depends on how the corporation decided to register its ownership of the title, when it first acquired it.
However with all Co-ops (apartment corporations), buyers should be prepared for the following:
• More closing costs: There will likely by double the legal fees at closing, because the co-op will have its own lawyer. So you will be paying for your own lawyer/notary and the co-ops lawyer.
• Co-ops have rules: the corporation must approve and sign off on any transfer of shares, they have the right to refuse members. As a result they can be very restricted. They might not allow animals, children, or even mortgages, so before investing find out everything you can about the co-op.
• Lending difficulties: because there are relatively few co-ops, not many lenders will lend for co-ops. Those that do generally have different requirements and rates, so begin your search early.
• More time: because the co-op must sign off on any transfers, give yourself a little more time to complete the transaction.
So, if you have found your perfect home and it happens to be a co-op, surround yourself with a team of professionals that have experience working with co-ops.