Buying a Condo vs. Co-op in Canada?

August 10, 2004 6:41 AM

Buying a condominium vs. buying a co-operative apartment. [more inside]

I'm looking to buy real estate for the first time (in Canada), but as a single person, I don't have a huge income, and am pondering buying a co-op instead of a condo. I know the general principles of buying a co-op (you own part of a corporation that operates a whole building, you don't actually own a unit like you do when you buy a condo - there's generally a monthly fee in addition to your debt/mortgage payment for maintenance/operations with both situations, etc). Does anyone have any experience with either that can speak to downsides and upsides?

posted by Cyrie to home & garden (7 comments total)

We owned a co-op apartment a while ago, and it worked out really well. One of the main issues to look at is the competency of the co-op board, since the financial well-being of the building (and your investment) rests in the hands of what are probably financial amateurs.

In a somewhat cautionary tale, the woman who had basically forced the co-op to be fiscally responsible for several years, and gotten the books into shape that our lawyer was very happy with when we bought it, was forced off the board while we lived there, because a bunch of snotty members got tired of her telling them what to do. When it works well, the co-op experience can be really great, but when it doesn't work, it's like eighth grade all over again.

Much more importantly, be very, very careful with the books, condo or co-op. If your lawyer is not basically a CPA as well, hire one to go over the books closely--a lot of them have taken on long-term debt that offsets the total value of the building. If they're reluctant at all to let you see the books before you buy, run. They'll definitely want to make sure you're a serious buyer before you can look--you'll need to have some kind of agreement in place to see them--but any credible co-op board should be proud of its books.
posted by LairBob at 7:19 AM on August 10, 2004

I live in New York and have owned both a co-op and a condo, so I can relate some (New York specific observations):

Condos typically cost about 10% more. My theory about this is that condos are much easier to buy, since there is no co-op review and the down payment amount (as low as 10%) is specified by the bank and not the building (anywhere from 20%-50% or higher).

Condos are more expensive to sell. Here we have transfer tax and some other nasty tax that adds up to a pretty hefty bill when you sell.

Co-ops have board application reviews. Please believe that there is nothing more intrusive than having someone that you are going to be living next to examining your checkbook register. It's offensive. With that said, you have no say over who will be buying the apartment next to you in a condo.

You can typically take off a portion of your co-op maintenance on your taxes. This is because your maintenance charge goes to paying off the interest on the underlying mortgage of the building.

Many co-ops have something called a flip-tax, where you have to pay a percentage of your profits to the building when you sell.

So really, it's six in one hand and a half dozen in the other...
posted by hummus at 7:38 AM on August 10, 2004

I bought a condo, and never even considered buying a co-op -- the idea of having to grovel before a board and not being able to sell without the board's approval is anathema to me. But obviously many people feel differently. (I'm extremely happy with the condo, for what that's worth; owning my own place while not having to mow the lawn, clear the snow, or fix the roof is my idea of heaven.)
posted by languagehat at 7:45 AM on August 10, 2004

I currently own a condo. It is a layered-townhome style: private entrance, private full garage, but above a unit instead of beside it. There are fourteen units in our complex.

The past decade has been interesting. We need to have a minimum three board members. The board members are inevitably either (a) people who volunteer just to get the damned AGM over; (b) people who need to be in control.

The end-the-meeting volunteers are nigh useless. They are also mostly harmless. Nothing gets done, but no one gets harassed either. They also tend to have good common sense and kind of ameliorate the control-freaks.

We've had a couple of treasurers who were less than honest. We've had some who were less than sensible. We've had some good ones. And then we finally got the smarts to pay someone to manage the property, accounts, etc. It's been great.

I've been fortunate to live over quiet neighbours. The first two we never, ever heard. Our third has a dipshit young adult who's big into crap rap and occasionally gets really damned loud after midnight. He shuts it down very quickly when we get fed up, and his mother is appropriately horrified by his behaviour.

The entire complex hasn't been that lucky all the time, unfortunately. There was a neighbour in a middle unit who had a rotten young male adult who was dealing, who would set the entire complex shaking with his stereo, who littered, and who had the cops visit him repeatedly. And it was impossible to get him evicted, because you can't do that as a condo association. Grrr.

There's a neighbour who's a busybody. She's determined to make endless pissant rules about everything, and is just fucking insane with her obsession for keeping everyone in line with her ideals. Fortunately, we've all learned to tell her to get bent, and she's learned to take it well.

I have a huge deck with huge planters, and that's more than enough plant-care to keep me happy. I have a garage that I can bang around in, as long as I'm sensible about the hours. I'm perfectly free to do whatever I want with the inside of my unit. Once in a while we all get together and pay for driveway sweeping, gutter cleaning, and other general maintenance. We all pay to get the driveway plowed, trees sprayed, lawns cut.

I can lock the door and leave for a year, confident that when I get back, I won't have been robbed, the yard will still be okay, and my mail picked-up by the neighbour. That's really nice.

On the other hand, I can't play my stereo loud, worry about making more noise than the downstairs neighbour would care for, and hate that my bedroom windows face the street.

I think I'm heading into a house next. But I do have to admit that I'm sorely tempted by the posh side-by-side townhomes that are available. Double garage, lots of floorspace, etc. But those units also don't have a view, don't have a huge deck, and I worry that their strata council might be as bad as ours has been at times. So it's a crapshoot.

(at the same time, I could end up with rotten neighbours if I'm in a house, and I'd have far, far less recourse...)

Six one, half-dozen the other, yup.

(re: selling. I'll have made ~20% profit on the place, won't be paying part of the sale to the condo corporation, don't have restrictions on who can purchase, etc.)

(re: condo rules -- demand to see them, and read them thoroughly. Ours are all very common-sense, partly because I fought like hell to get rid of stupid laws. I can easily imagine a condo corp having draconian, inane, silly laws. Beware!)
posted by five fresh fish at 11:06 AM on August 10, 2004

And I just remembered -- in a co-op I had to get Board Approval for any renovation (in my case gutting a bathroom). In my condo I can do anything I want without approval unless it requires an architecht.
posted by hummus at 11:37 AM on August 10, 2004

I had pretty good luck with my condo when I owned it, but it really is all up to how sane/efficient/dedicated the board is.

Read up -- do they have a Declaration of Condominium on file? Can you read the association's bylaws and the minutes of the board meetings for the past year or so? That should give you a decent sense of the recurring expenses, problems, etc. that face the building, and how the association deals with it.
posted by Vidiot at 11:48 AM on August 10, 2004

If you can not get the bylaws, minutes of all board meetings, and detailed accounting: run run away!

Honestly. It's a sign that the place is being run wholly unprofessionally, and it will prove to be a nightmare.
posted by five fresh fish at 4:47 PM on August 10, 2004