Tuesday, November 21, 2017

Divided vs Undivided Co-ownership, Part Deux

Time to take another look at the differences between divided co-ownership and undivided co-ownership. First-time buyers and buyers from outside Quebec tend to use the terms interchangeably. It's a good idea to be clear about what we mean when we talk about these two popular housing types.

Let's start with Divided Co-Ownership.

More commonly known as a condo. When you buy this, you own 100 per cent of your dwelling.  
A condo has it's own distinct lot number. In Quebec, it's called a cadastral designation. Whatever the address, or whoever the owner, the cadastral number is the one used by notaries, banks, the city tax department and other official agencies to identify your property. It is found on the certificate of location, the survey plan that shows the footprint of your condo within your building. Other cadastral numbers might also be associated with your condo, for instance if you have a balcony, or share a corridor with your neighbours, or have a garage space or storage locker.  Usually, these are common areas or common areas for which you have exclusive use. 

A condo has its own tax bill. Your bill is mailed directly to you to pay. Generally speaking, the taxes are higher on a condo than they are on an undivided property of similar size and quality. 

A buyer can usually put down a minimum down payment of five per cent on a condo. There can be exceptions. If the bank has concerns about your ability to pay a mortgage, they might ask you to put down a bigger down payment. If you are a foreign buyer, they will often ask for 35 per cent down.
Buying a condo you are free to deal with whichever lender you like. 

Because you own your specific unit, you are free to rent it out, as long as rentals are permitted in the building. (This is a big one. We'll get into it more when discussing undivided condos.)
 Now for Undivided Co-ownership
When you buy an undivided co-ownership you are buying a fraction of a whole building. In a triplex, that usually means about 33 per cent of the building, in a duplex, depending on whether you have the top or the bottom, or whether there is a basement or not, you're buying a 45-55 per cent share of the building as a whole. In a large apartment building, the fraction would be smaller. 

Unlike a condo, your undivided property will not have its own lot number. There were will be one cadastral designation for the entire building.  There is also only one certificate of location for the entire building but each owner gets a certificate with the plan of each fraction shown. 

There's one tax bill for the entire building and the portion you pay is determined by the percentage of the building you own.  Undivided properties generally have a lower taxable value than divided properties of similar size and condition. That means lower taxes for the owners.

Prices for undivided co-ownership properties tend to be substantially lower than for condos of the same size and quality. This is because the down payment on an undivided is a minimum of 20 per cent. The pool of buyers able to put together 20 per cent down is substantially smaller than the pool of condo buyers. That tends to have a moderating influence on prices.
Only two banks will finance the purchase of undivided properties, the Caisse Desjardins or the National Bank of Canada. If you are buying into an existing undivided property, you must use the bank already holding mortgages on the property.  If you are thinking of converting your own duplex or triplex, you get to choose which of the two to use. Each bank works with specific notaries so you will either have to start by choosing the bank and then ask them to refer you to a notary, or, if you really like a particular notary, accept that you will have to work with the bank with which they are affiliated. Not all notaries do this kind of work.

Renting an undivided property presents a few risks. Quebec law is very clear. An owner who rents his or her undivided property has no automatic right to repossess from a tenant. So, if you are buying into a newly created undivided co-ownership and if there is a tenant already in place, you cannot force them to move. You can offer them an inducement but they do not have to go. This sounds crazy but it is true. Check property listing for older apartment buildings in Outremont, for example, and you will note that many of them are attractively priced but have tenants who are not going anywhere. 

Likewise, if you are hoping to rent out your undivided property you might be opening a can of worms. First of all, your mortgage agreement will likely forbid you to rent (because banks don't want to be stuck with tenants, either). If you don't have a mortgage and you rent, you might still find yourself stuck with a tenant who won't leave. You could get around this if you offer short-term rentals, instead of a standard lease. Be careful though, many buildings are wary of short-term rentals and the headaches they can bring.
In undivided buildings, co-owners have a right of first refusal. That means that when the property is put up for sale, the other owners are given an opportunity to buy it first. Often, the co-owners are given a second opportunity to buy once a promise to purchase from an outside buyer is accepted. They then have a chance to match the offer on the table. Co-owners who renounce their right of first refusal must do so in writing and within a set time frame.

For all the complications and quirks of undivided co-ownership, it does have one big advantage. It is much easier to turn a duplex or triplex (or any other multi-unit building) into an undivided co-ownership than it is to turn it into condos. 

All you need to do is ask a notary to prepare an indivision agreement. This agreement is a multi-page document that lays out who owns what, what the rules are, how decisions are made and other minutiae of owning. Next, a land surveyor must prepare a new certificate of location with a detailed plan of each floor or unit in the building. All of this can be accomplished in about two months and at relatively little cost. 

Turning a similar duplex, triplex or apartment building into condos is a much lengthier process and much more costly. 

Montreal has frozen condo conversions as a way of protecting the rental housing stock. (we can argue about how effective that has been.) If you want to convert a building where even one unit has been rented in the last 10 years, even if the unit is now empty, you must apply to borough for permission. Quebec's Rental Board will also want to know if any of the dwellings have been rented in the last 10 years. The owner must provide proof that all the tenants have been advised of the conversion plan. Once those steps are undertaken, the city and the province must give authorization. This can take six months to grind its slow way through the gears of bureaucracy.

A land surveyor must prepare a new certificate of location and must apply to the Minister of Natural Resources for cadastral designations (lot numbers) for each divided unit. Are you dizzy yet?  Once all of that is done, a notary draw up a Declaration of Co-ownership. 

The process is long, complicated and costly. There are deadlines that can't be missed. Usually, lawyers specializing in real estate transactions are involved because the paperwork, the procedures and the all-important deadlines are not easy to navigate. 

As a final disincentive, in Montreal, some boroughs can and do impose what is known as a "park tax" when a building is converted into condos. This tax represents 10 per cent of the land value as stated on the property evaluation rolle. For a typical Verdun triplex, for example, that might mean $10,000 to $15,000.  That tax is payable before the permit to convert the property is issued.  

The good news is that it is easier and less costly for co-owners of an undivided property to convert to condo. It still takes time and will cost you money, but the park tax doesn't apply and the process is more streamlined. 

Do you have other questions about buying, selling or converting a property to divided or undivided co-ownership? Drop me a line of give me a call. I'd be happy to help. 

Friday, December 9, 2016

What Were They Thinking?

Yes, a cat, a stripper pole and two double beds. Make of it what you will. Without the cat it's just a seedy condo in the red-light district. The cat is what makes it a home.

Sunday, October 30, 2016

A Little #VerdunLuv in the pages of The Gazette

Montreal's English daily newspaper celebrates some of the high point's on Verdun's high street, known locally as "La Well".

Had a lovely time visiting with reporter and former colleague Susan Semenak at Verdun's Café La Tazza, where owner Johanne Minicucci offers a warm welcome and a frothy cappuccino. So much to love about my neighborhood.

Here's a link, for however long it is good. http://montrealgazette.com/life/wellington-st-has-come-alive-since-verdun-ended-its-dry-era

Wednesday, September 14, 2016

New Property Assessment Roll is Out. How Did Your Area Fare?

The city of Montrea released its triennial property roll this morning. Property values are up across the board, though the rate of increase varies widely depending on the property type and borough or municipality within Greater Montreal.

In brief, the value of the average Montreal home rose by 4.6 per cent, while the value of the average condo rose by a scant 2.2 per cent. The one type that saw a big jump was the multi-unit building with six or more apartments. The average value rose by a whopping 13.2 per cent.

The city takes a snapshot of property values once every three years and sets property taxes according to the value. The snapshot the city is using for this roll was taken in July, 2015. The new roll will apply from 2017 through 2019.

Of course, the increase in a property's value is only one half of the equation. We now wait to see what mill rate will apply in each of the boroughs and municipalities. The mill rate is the tax per $100 of property value. In Verdun, the basic 2016 mill rate was 0.5795cents per $100. In the Plateau, the base rate was set at 0.6562 cents per $100.

The new budget should be out mid November.

You can check your new evaluation by visiting the city's web site here and then click on "Consultation du role foncier" in the left margin. Enter the robot-fooling alpha-numeric code and then enter your civic number and street name. Have fun.

In the meantime, here's a map that shows how evaluations have risen across the island since the last roll was created.

Tuesday, May 31, 2016

Just Listed! Ville Emard Triplex. An Antique Beauty with the Engine of a Much Newer Model.

This classic 1920s triplex features a very large ground-floor apartment with three bedrooms, an elegant central dining room, recently renovated kitchen, front parlor, as well as a huge, partially finished full basement with laundry room, powder room and teenager's bedroom.

It has all the lovely decorative elements of a bourgeois triplex of its time. There's ornate stained-glass in the front windows and leaded glass lights both in the heavystately front door and the lights that flank it.

Inside the main unit you'll find original woodwork, oak pillars on either side of the dining room, topped with globe lights. There are two built-in glass china cabinets and lovely embossed wall coverings. The original hardwood floor has border running around it.

The master bedroom is a double parlor divided with articulated French doors. A perfect set-up for bedroom and office, bedroom and boudoir or bedroom and nursery.

The second bedroom is currently decked out in the bleu-blanc-rouge of the Montreal Canadiens. Go Habs, go!

The partially finished basement is HUGE! There's a teenager's bedroom, a familly room waiting to be created and enough space to play floor hockey. The subfloor is raised several inches above the concrete floor and there's still more than 7 feet of height. The basement also has a full laundry room,powder room and a craft room. Oh yes and there's a cedar-lined sauna that is currently being used for storage.

Upstairs, there are two apartments, a one-bedroom and two-bedroom. They bring in rents of $1,175 a month with the tenants paying their own utilities.

The property is located at 2359-2363 rue du Parc-Garneau in Ville Emard. Parc Garneau is pocket-sized park located between Briand and Monk Blvd, a tree-lined oasis directly across the street. You can sit out on your broad and shady front porch and watch the world go by.

There's also a small backyard just cryin out for a deck and some shade-loving plants.

Monk metro (green line) is a seven-minute walk away. Monk Blvd. is the neighborhood's main shopping drag, with groceries stores, mom and pop shops, a pharmacy, wood-fired delights thanks to Ville-Emard Bagels, Eddy Bicycles for two-wheeler tune-ups, an SAQ and everything else you might need.

The asking price is $560,000.You might be tempted to think that in such a late Edwardian beauty everything is antique. Not the case. The property has a white membrane roof, installed in 2013. The main unit has a tankless water heater. The gas-fired furnace dates from 2008 and feeds the original cast-iron radiators (ooooh hot-water radiators are so toasty).  All three units have updated electrical panels. All the plumbing has been changed to either copper or Pex. An antique beauty with the engine of a much newer model.

Give me a call to schedule a visit!

Friday, May 13, 2016

What Were They Thinking? Drive-By Shooting Edition

When I was a newspaper reporter the photographers used to refer to them as "drive-by shootings". They were the photo assignments that one cared so little about that one did not even get out of the car to snap the image.

Call me crazy, but if you are a real estate broker the very least you can do for your client is get out of the car when you take the exterior photo of the building. That goes double if the extterior photo is the only one you're going to post with the listing. Pffft!

Friday, May 6, 2016

At the Crossroads of Downtown, the Plateau and the Village

Just listed!  Here's a spacious two-bedroom condo on the second floor of a classic, stonefronted Montreal six-plex.

1662 Sherbrooke St. East faces beautiful Lafontaine Park, the beating green heart of the Plateau Mont-Royal and a paradise for joggers, cyclists, and sun bathers.

The building dates from 1923. The ground floor is occupied by an accounting firm. They keep 9-5, Monday to Friday hours, which is just the kind of neighbors we all wish we had. No loud parties on the weekends. And no complaints about your loud parties on the weekends.

The condo features two good-sized bedrooms, separated from one another by the bathroom. The living room is at the front. The nicely renovated open-concept kitchen and dining room are at the back, with a large and comfortable back balcony perfect for lazy summer evenings.

The condo also has a private garage with automatic door.  Park your car until the weekend. With a Walkscore of 92,  all the daily conveniences are within a few blocks. STM bus 24 goes right by the door and will whisk you to Sherbrooke metro, or downtown straight along Sherbrooke St. Access to Highway 720 and the Jacques Cartier bridge are super quick.

 The asking price for this condominium is $369,000. Taxes are $2,853 annually. Condo fees, paid quarterly are $1,700.

Give me a call if you would like to visit!

Mary Lamey
Century 21
514 978-6522

Friday, April 15, 2016

Montreal's Resale Market Regains the Bounce in its Step During the First Quarter of '16

Good news from the Greater Montreal Real Estate Board. The local resale market got off to its best start in four years, with a 10 per cent increase in sales across all housing types.

There were 10,600 sales during the first three months of 2016, compared to 9,645 a year earlier. Sales were up across the Greater Montreal area, which is divided into five different census area.

Revenue properties with two to five units saw the biggest jump, up 20 per cent. That represented 958 properties sold. Condo sales were up 12 per cent, though prices edged down 1 per cent compared to a year earlier. Single home sales rose by six per cent, to 6,449 units.

The average prices of a Montreal home rose to $285,000, a two-per-cent bump. That average prices takes into account all sales from unrenovated bungalow in the furthest reaches of the 450 to the grandest mansion sold in Westmount. Obviously, there have been many more of the former than there were of the latter. Don't takes the average prices as an indication of what a house will cost you on the island.

The first-quarter results represent the seventh consecutive quarterly increase since 2000, when the board began keeping trimestrial statistics in 2000. Good times!

There were 34,208 properies listed for sale in the Montreal area, down five per cent compared to a year earlier.

Tuesday, March 22, 2016

Thursday, March 17, 2016

A Limited Time Offer on a Plateau Cottage - 4168 Henri-Julien

Yours for $645,000.

The renovated Plateau cottage was stripped and redone in 2009. The result, a big comfortable family home that combines old-school Plateau cachet and contemporary design.

With more than 2,000 square feet of living space, there's plenty of room to manoeuvre, whatever your lifestyle. The ground floor has high ceilings, a double living room and huge eat-in kitchen with a custom island ideal for cooking, eating or hanging out. There's a four-season sunroom off the kitche with windows onto the intimate backyard, where sunlight pours through for much of the day. The unfinished basement is ideal for storage.

Upstairs you'll find three big bedrooms, one with a door leading to a deck-ready roof. The bathroom is big enough to hold a barn dance, if that's your thing.  There's a huge soaker tub and a walk-in shower.

The vendors have dropped the price to $645,000 but that is a limited time offer. If the property is not sold before summer, the house is coming off the market. Make your move.