Co-ops are organizations incorporated under the Cooperative Association Act that provides housing to its members. Members purchase a share to join the co-op and directors are elected to govern the co-op. Most co-ops are similar to rentals or a lease with no equity in the building. However there is no landlord and monthly rents are called “housing charges”. Monthly housing charges are based on what the co-op needs to break even after operating expenses and putting money aside for repairs. Approval of changes to housing charges are usually made by resolutions at general meetings.
Co-ops are considered “mixed income communities” with people from a range of backgrounds and incomes. As they are independent organizations co-ops have their own application process to join. Member control is democratic and controlled by members who actively participate in setting policies and making decisions.
While co-ops are usually located in some of the most central areas of town with large units and distinctly lower prices than regular strata properties, there are key things to keep in mind.
The registered owner is the Co-op, and the buyer is buying a share and exclusive use of the unit but not buying real estate, it is a leasehold interest so the lease needs to be received and thoroughly understood before moving forward
The buyer is purchasing a period of time left on the lease, so as the lease runs out, the unit may not increase in value
The buyer needs to understand the use of the unit, are there rentals allowed, if not occupied all year long are there tax implications, etc.
Because a co-op is a purchase of a share and not real estate, lending can be challenging and may require a cash purchase.
As always, having all the information is pertinent before making any decisions. We are here to help with any questions and have the best real estate lawyers to recommend to guide you through the legal ins and outs.