If you are shopping around for a condo, you will notice they are listed as either “divided” or “undivided” co-ownership. Some buyers skip over that detail—after all, a condo is a condo, right?
But in fact, there are significant differences between the two; and as someone who is about to invest in property, it’s important to understand what they are:
Also called “condominium”, divided co-ownership denotes that all owners are financially responsible for their respective properties. It is necessarily administered by an agreement called a “declaration of co-ownership” that standardizes the relationship between the co-owners and the Board of Directors.
In a nutshell, divided co-ownership comprises of:
- Private areas (unit, balcony, locker, parking space)
- Common areas (lobby, swimming pool, roof, parking, elevators, community rooms)
These spaces require regular maintenance, so co-owners are expected to pay a monthly fee aside from their mortgage—that includes taking care of major repairs and renovations and preserving the structure of the building.
Undivided co-ownership is only available in resale. So if you’re purchasing a brand new development, the condo should be divided. The biggest difference in an undivided complex is that there is no division between private areas and common areas. The entire building is owned by all property owners.
In addition to their own units, undivided co-owners are responsible for:
- The loans of the other co-owners
- Municipal taxes, insurance, and school taxes
In this case, co-owners are under no obligation to pay co-ownership fees. With that in mind, it is recommended that co-owners save ample emergency money for any necessary repairs or financial setbacks from other co-owners. Because of the risk that comes with undivided co-ownership, it has become common to create an ownership agreement that clarifies the way the building will be managed.
To ensure you are well-informed about your property’s ownership laws and agreements, contact us.