Over the past several weeks we've been taking a closer look at some of the latest senior housing trends, one of the most exciting of which is co-ownership. Co-ownership is popular as a way for young professionals to get into a costly real estate market that may otherwise be unaffordable. For older Canadians who want to remain at home but find they have too much space or need help to maintain their home, co-ownership also offers perks.
What is Co-Ownership, Anyway?
There is a lot of confusion out there as to what a co-ownership arrangement and how this type of ownership differs from a condominium.
A co-owner is an individual (or group) who shares ownership in an asset (like a home) with another individual or group. According to Investopedia, "each co-owner owns a percentage of the asset, although the amount may vary according to the ownership agreement."
In Ontario, there are different ways to co-own a home – as a group of individuals or by setting up a corporation. According to the Government of Ontario, co-owners either have:
Equal shares of the property and equal decision-making power or
Different levels of shares and decision-making power.
For most seniors, co-ownership as a group of individuals is more commonly seen. In this case every co-owner is on the property's ownership title as either joint tenants or tenants-in-common.
The Difference Between Condominiums and Co-Ownership
While we tend to think about condos as a type of building, "condominium" is a term that describes a form of ownership. It's important to realize that co-ownership and condominiums are terms that do not necessarily describe the same ownership arrangement, although a condominium can be a form of co-ownership. For example, if they choose, co-owners can establish a condominium corporation where each co-owner owns their own unit and a share of common amenities.
As Urbaneer explains, in most cases with a condominium, the buyer owns the interior of their unit and receives a deed for that interior space, which is registered against their mortgage. The buyer also shares an interest in the common areas of the building.
However, with a co-ownership, owners receive a deed to the entire building (including the common areas) and in some arrangements receive shares that give them exclusive rights to occupy a unique space within the building. With co-ownership, all owner names appear on the property's title.
Benefits of Co-Ownership
There are benefits to all these different types of co-ownership. For seniors who are looking for help with property maintenance, companionship or financial support, this option makes a lot of sense. This unconventional form of home ownership makes housing more affordable because the co-owners share the purchase price of the property and split the costs of property tax, property maintenance, utilities and other housing-related expenses.
In addition to making housing more affordable, co-ownership offers greater freedom to travel (knowing someone is home to care for the property), making it an ideal scenario for snowbirds or anyone who travels frequently for work.
Of course, as with anything in life, there are risks. While sharing the responsibilities of home ownership is beneficial, it also puts you at risk if the other people in your arrangement act recklessly, negligently or default on their financial responsibility.
For this reason, it's critical to take the time to carefully choose the right co-owner to share your home with. At HomeShare Alliance we conduct extensive background checks and a rigorous interview process to ensure a match that is a good fit for you, which ultimately reduces your risk. Give us a call today to learn more about the benefits of co-ownership!