Divided Versus Undivided Co-Ownership, What's the Difference?

I'm working with a new client ready to buy his first property.  He said he was looking for a condo, but I've come to realize that buyers throw that term around without knowing what it means.
In Quebec, there are two kinds of shared ownership properties: undivided co-ownerships and divided co-ownerships. People tend to use the word condo to mean both but they are distinct and there are things a buyer should understand about each before purchasing.
When buying into an undivided co-ownership property, you are, in fact, buying a share in a property as a whole. In a triplex, that typically means that you are buying about 33 per cent of the roof, foundation, walls and yard. You are given exclusive use of a portion of the property but you are essentially a shareholder in the whole.  The property has one tax account, divided among the owners according to their share of the property. One of the big advantages to this kind of ownership is that property and school taxes are substantially lower.
Undivided co-ownerships have their own particularities. 
As a rule of thumb, asking prices for undivided properties are lower than those for divided properties of similar size and with similar features. That's because buyers are obliged to provide a larger down payment when buying into an undivided property, 20 per cent down, versus the usual minimum 5 per cent.
Only two lenders will mortgage them: The National Bank and the Caisse Populaire. You can't choose, the lender will already be in place when you make an offer to purchase.
The third thing about undivided properties is that you have no automatic right to occupy the premises. Whaaaa?  It's true. If you lease your "apartment" in an undivided co-ownership building, Quebec law says that you cannot then reclaim it unless the tenant agrees to go.  It is equally true that if a rental building is turned into a undivided co-ownership property, the tenants cannot be turfed out, regardless of how many months notice they are given, or how much money you offer them as an inducement to leave.
For this reason, many undivided properties have clauses in their co-ownership agreements that forbid owners from leasing their properties.
Life is much more straightforward with a divided co-ownership property. Properly, this is what people mean when they talk about condos.  You own your unit, its walls, floors and ceilings. Your tax bill will be higher, because it will more closely reflect the market value of your individual unit. This kind of ownership is relatively new in Quebec. It only became possible to divide a property after the Quebec Civil Code was revised by the National Assembly in 1969.
Unlike an undivided, the down payment can be as low as 5 per cent and you can seek a mortgage with any lender you like.
Which is the better option? There is no easy answer. For some people, substantially lower tax bills trump all other considerations.  For others, there is a clean, simple logic to owning a unit, versus a share in a property.
The main thing is to consider what you're buying into. Read the co-ownership agreement. It will be so very booooooooooooring, but you'd be a fool not. A good agent will read it too, and advise you on potential problems. Are dogs allowed or not? Are carpets mandatory, or can you have hardwood floors? Are window boxes okay? Who has use of the yard or the basement? How much is each owner required to contribute to the reserve fund. All will be spelled out in a well-written co-ownership agreement.
Also read the minutes to the last two or three annual meetings of the co-owners. These will give you an idea of the issues and possible conflicts in the building. Examine the financial statements so that you know what big bills may be coming due and how much money is in the reserve fund.

Bun Fight at the GMREB Corral Yields its First Crumb

Stop the presses! Michel Beauséjour has tendered his resignation as chief executive officer of the Greater Montreal Real Estate Board.
It looks like Beausejour is falling on his sword after making some rather ill-considered remarks to La Presse last month about the impact Quebec's new brokerage act will have on the industry. Among other, things, he said the new laws governing the business will help "professionalize" the industry and put and end to the "époque des peddlers".
Nice!
You can imagine how well this sat with many of  the 10,500 members of the Greater Montreal Real Estate Board. The GMREB is a business group whose only purpose in life is to promote the practice of real estate in the metropolitan area and to operate the MLS system for local agents.
The Beauséjour interview went on to make good and valid points about changes to the brokerage act that were five years in the making and why the public should care, but the use of the word "peddler" was an insult too far for some. Was it too much to hope that Beauséjour, whose salary is paid by agents, would advocate for agents without besmirching them?
A petition demanding Beausejour's resignation circulated on the Internet and was followed by a letter delivered by bailiff demanding the same.
The board of the GMREB didn't much like that and sicced lawyers, again paid for by the members,  on the petition writers. The board then sent out a communiqué to the membership:

"Your Board of Directors reviewed this issue and while also disappointed with the tone of the article, realized that one cannot control content in a newspaper article. Also, given that the CEO has given over 1,000 excellent interviews over the course of 11 years, the Board of Directors has unanimously decided to stand in support of the CEO who has always had the industry’s best interests at heart.  This viewpoint and support are also openly shared by the Board of Directors of the Quebec Federation of Real Estate Boards.  Each and everyone of these people, on both Boards and who are my colleagues volunteering on your behalf, are 100 per cent in support of the CEO. We publicly stand behind him and will not allow him to resign, nor does he have any intention of doing so.

As a matter of fact, we are all, to say the least, dismayed and frankly appalled at the tactics being used by some people to undermine an individual who is held in the highest regard by our industry.

According to our lawyers, there are potential severe legal consequences to these latest tactics.  Therefore, our solicitors have sent a warning letter to the petition website, to request that the petition be retired because it is potentially  defamatory . . . " 

That was on June 4th. Beausejour's departure was announced today in a terse three-sentence communiqué signed by Patrick Juanéda, president of the GMREB's board of directors.
In his leter (available in French only, ahem!) Beauséjour  noted the radical changes afoot in the real estate sector, the entry of new players and the insecurity that is causing some agents. Having taken the GMREB as far as he can in the last 10 years, it has become apparent that it is time for a new leader to lead the organization forward, he said.
Maybe that's all there is to it, but I suspect Mr. Beauséjour was feeling the heat from the rank and file. As the old saying goes, we wish him well in all his future endeavors.

Montreal Eco Condos Make it Easy to Be Green

I finally got a chance to tour the Abondance Montréal condo development yesterday. The newly built triplex is a prize-winning example of sustainable housing, concieved by EcoCité Developments and located in my favorite neighborhood, Verdun. The first phase of development is known as Le Soleil, a nod to the building's solar energy features.
I've been following the Abondance Montréal story for years now, dating back to my days as The Gazette's real estate reporter.
The project is one of the winning entries in a Canada Mortgage and Housing Corp. competition to build highly energy-efficient homes that have a low impact on the environment. The big idea behind the program was to find ways to build homes that create as much energy as they consume, so-called Net Zero homes.
Phase I of Abondance Montréal meets that goal beautifully. The three-unit building is topped by a very large solar panel array that serves as a sun shade on the shared roof terrace. The panels not only supply all the energy needed for the three units but also sends surplus energy back into the Hydro-Québec grid. At the end of the year, the condo project creates as much energy as it uses. Even better, the condo owners never have to worry about paying for electricity or hot water. They get it for free.

Christopher Holmes, the dynamic young entrepreneur behind Abondance Montréal, led the hour-long tour of the building yesterday. He explained that as amazing as the solar power system on the roof is, it is merely the crowning element to a carefully considered project.  The building consumes only 24 per cent of the energy a typical Canadian home would, largely because of the choices that were made during the design and construction phases.
The biggest energy savings come because of the highly efficient building envelope, which has an R-45 rating, nearly three times better than the usual stud, fiberglass and vapour barrier plus brick confection. The sprayed on urethane insulation is made from soy-bean oil and recycled plastic bottles. It requires less labour to get the job done.
The windows are triple glazed. The windows and transoms were installed to take advantage of natural light and passive solar energy. A geothermal pump uses the Earth's own heat to keep each unit comfortable. Recovery systems grab the heat out of hot water as it circles down the drain and from exhaust air before it is expelled through the ventilation system.
Water from the roof drain and from the French drain that keeps the foundation dry is redirected not into the municipal sewage system but into a holding tank, where the water is filtered and used to flush the toilets. Other elements like low-flow toilets and energy efficient appliances, a master control that allow you to cut the power when you leave home in the morning, all help make it much easier to be green. Holmes took pains to explain that all the green components used in the project are readily available through local or regional suppliers.                                                                                                                                                                                                       Rob Miners of Studio MMA was lead architect on the project. His firm has gained a solid reputation for its work in sustainable architecture. Their best known project is the Mountain Equipment Co-op store in Marché Central. Abondance Montréal is making just as much of a splash.

Holmes was asked by one of the people on the tour why his firm had chosen to build in Verdun. I beamed with pleasure as he talked about the area's many advantages, including proximity to the Métro (LaSalle station is about two blocks away) the nearness to downtown and the ease with which one can find services on nearby Wellington St.
"It's an up and coming neighborhood and one we believe in," Holmes said.
Two of the three eco condos have already been sold. The third will remain open to visitors for another few months but it is for sale  though, sadly, not by me. Asking price is $299,000 for 1,040 square feet of living space.
EcoCité has broken ground for a second phase of development, to be called La Terre. It will be a four-storey project with many of the same features, with one important difference. While it will be built to be be solar-panel ready, it will not initially feature solar energy. That's because Phase I Abondance was built as a demonstration project and benefitted from grants and subsidies from partners like Hydro-Québec. That aid won't be available for the second phase, putting the cost of a big solar package out of bounds, for now.

Thanks Sleazebag For Making Us All Look Bad

I get a little touchy when people make gross generalizations about the sleaziness of real estate agents. I pride myself on working hard, telling the truth and going that extra mile for my clients, whether it's helping pack or declutter their homes, driving them around or babysitting their kids, if need be. Whatever it takes to make the deal go smoothly. I like to think my clients appreciate the added service.
Every once in a while I cross paths with the kinds of agents who give the rest of us a bad name. It happened this week, in fact.
I tried to make an appointment to visit a new listing with buyer clients. I texted the listing agent once, which is the usual practice. No response.  I called three hours later. Voice mail. The next morning, I called again and got the listing agent's associate, who promised to call right back . .  . . . . . . . . . Six hours later, she called. They had received an offer. What a surprise!!
I insisted on my clients' interest in seeing the property. Unfortunately, the vendor accepted the offer to purchase before I could get them in.
 The listing agent, who had promised to call and tell me if the deal was done, did not call. I had to call her. Again. Jerk. Here's where the story gets interesting. She told me the buyers' offer was conditional on them being able to sell their property. OK, that's not unusual. How much time do they have? Two weeks, three weeks? Maybe there's still a chance my clients will be able to make an offer if that deal falls through.
The buyers have until August 30th to sell their property, she said. August 30th!!!! Today is June 20th. That means the vendor's house is tied up for the next two months and ten days. If the buyers back out, the vendor will have lost almost three months waiting.
Why the hell would any real estate agent advise their client to accept such an iffy offer, especially as her house had been on the market for less than a week? I'll tell you my theory. I bet the listing agent is working both ends of the deal and stands a chance to collect a double commission.
If it had been my vendor client, I would have called everyone who had visited the property and told them an offer was coming in. I would have tried to draw a second offer, just to be sure that the vendor was getting the best price possible. The listing agent sure as shooting did not do that. In fact, she made sure my clients could not get in. Sleazy.
I visited the house this weekend, even though I knew my clients were basically frozen out. The property was being sold without legal warranty as to quality, which made me wonder if the vendor was an elderly person, as if often the case with sales without legal warranty.
I was greeted at the door by a woman in her 50s. She had the peach fuzz hair of someone who had recently undergone cancer treatment. Her eyes were hollow. It was 28 degrees out, but she had a blanket over her shoulders. She had a hospital bed, grab bars by the toilet. She was obviously not well.
Her house was in pretty good shape, with a nice yard. I told her I was sorry that my clients had not had a chance to see her property and make an offer. "Your agent did not return my calls," I said.
She shrugged. "It all happened so fast," she said.
I wished her a good afternoon and good luck with the sale, though I added that a part of me still hoped my clients might get a second chance. She stayed in her armchair as I let myself out.
A final thought crossed my mind as I walked to my car.
What kind of real estate agent makes a vendor so obviously unwell do her own showings? The kind who gives all of us a bad name.

Bursting the Myth of the Real Estate Bubble

If I had a nickel for every time someone has said they were waiting for Montreal's real estate "bubble" to burst, I'd have enough money to buy one of those fancy lattés instead of a Timmy's double-double.
The myth of the bubble is the single biggest misconception I battle as an agent. I can talk until I'm blue in the face about fundamentals like interest rates, job creation and demographic shifts and the impact they have on the local housing market but I guess I have all the credibility of a used-car sales person. "Trust me! I'm a real estate agent."
OK, so don't believe me. But take a peek at this column by Gazette business scribe Jay Bryan. He puts his boots (more like LL Bean mocs, actually) to the myth of the housing bubble

Here's an interesting point to note about the Montreal real estate scene. The number of properties for sale in May, the last month for which there are statistics, fell by 16 per cent compared to a year earlier. That might have to do with nervousness. It's also true that if people don't list, other people don't list and next thing you know, there's a shortage of listings. A classic Catch 22.
That shortage of listings translated into an 8-per-cent drop in sales. Still, despite the inventory squeeze, the volume or total dollar value of sales rose by 1 per cent compared to May, 2009. Prices for houses, condos and plexes were up 8 per cent, 7 per cent and 11 per cent respectively, according to the Greater Montreal Real Estate Board
Not too shabby

Cruising Season on the Lachine Canal

I accidentally deleted the previous post of this photo, taken by my friend Karin, on one of the first fine spring Sunday afternoons of 2010. It absolutely bears reposting. I'm only sorry I lost the reader comment at the same time.
The photo was taken while she was out for a stroll with her mother along  the Lachine Canal.

Dozens of cars, refrigerators, bikes and more than a few guns were hauled out of the canal in the 1990s as the old industrial waterway underwent a massive clean up.  There is a thick layer of toxic sludge at the bottom of the canal, a reminder of the days when the canal banks were lined with tanneries and other heavy industry.

The Lachine Canal National Historic site reopened to kayakers and boaters in 2002. The bike path is hugely popular with weekend pedallers, bladers and strollers. Now I've seen it all.

The Luxury of Time

Hi! You might remember me? I'm the real-estate agent who had all that time on her hands over the long, quiet fall and winter to blog.

Funny how the insanity of a highly concentrated buying season has eaten up every spare bit of time since February, not to mention pretty much all the brains cells I had. (Okay, I spared a few for American Idol and the NBA playoffs, but only a few.)

This was the last property Amy Barratt and I listed, a really well maintained duplex on Valiquette St. in western Verdun. It has two two-bedroom apartments, with the unfinished but high, dry and clean basement accessible from the ground floor. It also has a nice fenced yard.


I had meant to feature it on my blog, but never got the chance. We signed the contract with the vendor on a Tuesday, spent Wednesday taking photos and measurements and entering the information on the Montreal Real Estate Board's computerized MLS. (A loooooong process). We started getting calls on Thursday. By Saturday we had an accepted offer. The whole thing was wrapped up - inspection and financing included - within 12 days.

The vendors are pleased. We got them just about 97 per cent of their asking price without any unpleasantness, hostility or anxiety. The buyers are a nice couple expecting their first baby. They plan to finish the basement and to use the rent from the upstairs unit to offset their mortgage.

I wish I had ten more of these duplexes to sell.