Generally less expensive than a detached house, a condo can also be an interesting real estate investment. That said, checks are required with respect to the regulations, as well as the financial and structural health of the building. You also have to be ready to live and decide as a community.
THE essential question
According to Mikael Lacroix, residential and commercial real estate broker for Groupe Sutton-Immobilier Estrie, affiliated with Barnes International, the most important aspect to consider before buying an existing condo is to know that owning a condominium involves sharing with other owners. “When you buy a condo, you are at home, but not at home. If we are aware of it and comfortable with it, we can find advantages in it, ”notes the broker, naming the exterior maintenance chores that we no longer have to take care of since they are taken care of. by a company.
One condo, three parts
A condominium is divided into three parts:
– the private part, which is often the personal indoor unit;
– the common areas, such as the land outside, the entrance vestibule shared by the co-owners;
– common areas for restricted use, such as balconies or parking spaces. Each owner benefits from his space alone, but he must submit to the regulations of the building. For example, it may be forbidden to have a barbecue on your balcony or to wash your vehicle in your parking space.
Read the building regulations carefully.
It is essential to read the declaration of co-ownership in which we will find the regulations of the building before signing an offer to purchase. Some may not be suitable for you, such as the fact that dogs are not accepted, that short-term rental is prohibited, that bicycles must be stored in a storage room, etc.
Check the financial health of the co-ownership
Another fundamental aspect: check the financial health of the co-ownership. “It is often a condition in the promise to purchase and there is always a place provided for the buyer to read all the documents of the co-ownership”, underlines Mikael Lacroix.
Also remember to ask for financial statements and minutes, what is in the contingency fund and whether there is enough money planned for major work to be done soon. “It’s important, because the co-ownership could have voted that each co-owner take $3,000 out of their pockets to pay for the renovations without taking the money from the contingency fund,” says Mikael Lacroix.
“By becoming a new co-owner, you would be obliged to pay these $3,000 since the vote is prior to your arrival,” he adds.
To get a clear idea about the building, including its financial statements and administration, real estate brokers ask a duly authorized representative of the syndicate of co-ownership to complete a request for information form from the syndicate of co-owners (DRCOP) each time that they make a promise to purchase. This necessary step to protect the new purchaser of a co-ownership was recently supported by the Quebec government, which passed two new laws.
Two welcome new laws
Bill 16 introduced by Quebec modifies the rules regarding co-ownership in order to better protect consumers.
“There are two important articles which are a legal revolution in co-ownership because they were adopted by the National Assembly and will allow buyers to obtain useful information prior to the transaction”, underlines Yves Joli- Cœur, president of the Association of managers and co-owners of Quebec (RGCQ) and instigator of the popularization site on co-ownership condolegal.com.
“Section 1068.1, which is not yet in force — it is expected to be sometime in 2023 — states the following: Anyone who sells a fraction of the co-ownership (private portion plus the share of the common portions) must in good time provide the promising buyer with a certificate from the syndicate on the state of the co-ownership, the form and content of which are determined by government regulation.. This text means that each condominium real estate transaction will first require a certificate of compliance. The buyer will know in particular if the co-ownership is in difficulty, if there are disputes so that the transaction is much more transparent.
“The second article of law 1068.2 is already in force: Anyone who promises to buy a fraction may ask the syndicate to provide him with the documents or information concerning the immovable and the syndicate which are such as to enable him to give informed consent. The syndicate is required, subject to the provisions relating to the protection of privacy, to diligently provide them to the promising buyer at the latter’s expense. »
PHOTO OLIVIER JEAN, LA PRESSE ARCHIVES
The question of insurance in the event of a claim concerning a co-ownership is to be taken very seriously.
Collective responsibilities
Insurance costs are added to the various co-ownership charges and the law now requires you to have civil liability insurance for a co-ownership (1 million for less than 13 units, 2 million for more than 13 units). “There is another component that has been made compulsory: it is the self-insurance fund which includes the amount of the deductible in the event of a building claim, but you must also have the building appraised by a certified appraiser to check the cost of rebuilding the building, because if it exceeds the insurance coverage, it will have to be revised upwards to ensure that the necessary funds are available”, specifies Mikael Lacroix.
Partial or global inspection
Before buying, you can choose to have only your private portion inspected, but you can also mandate the inspector to check the interior and exterior common portions. The inspection can be an opportunity to find out how the building was built, if the units are well soundproofed. On this point, you can also question the neighborhood.
Invest… and get involved
Living in a condo requires collective involvement and responsibility and you have to be ready to participate in meetings of the syndicate of co-ownership to make decisions, or even to become an active member to take care of the specifications.
For Agnès D., the experience turned out to be rather positive in her former triplex, where each floor was occupied by an owner. “There can be disagreements, so you have to know how to handle the art of compromise, but overall it was going well. »
Isabelle M., for her part, is not ready to reinvest in a condominium. “The positive side is that it was accessible for me as a first-time buyer, but there were a lot of negatives. It was a big building, the meetings never ended and there were often disagreements. Also, we pay for a contingency fund, but even if there is maintenance work to be done, such as painting, it can take months or even years before they are done. And then, people watch each other, it did not suit me at all, but when I was asked to get involved in the operation of the condominium, I played the game to do my part, but it is very important to know that this is a heavy responsibility that is placed on your shoulders. »