What is the difference between a co-ownership, a co-operative, and a condo apartment?
Legally, there is a difference, but in day-to-day life, owners wouldn’t notice much distinction between living in a co-op/co-ownership building versus a condo. Potential buyers likely wouldn’t spot the difference either—except when it comes to affordability. Co-ops and co-ownerships tend to be more affordable compared to condos.
“Affordable” and “real estate” are rarely used in the same sentence when describing homes in Toronto. So, let’s take a deep dive into the differences between co-operatives, co-ownerships, and condos.
We like to think of co-operatives and co-ownership properties as unicorns in our market. They are exceedingly rare, their owners seldom sell them, and when they do come to market, potential buyers often hesitate, skeptical of their legitimacy. Let’s explore the differences and benefits of each property type.
Condominiums
Condos are the most common legal structure for apartment buildings. These buildings typically have anywhere from 2 to 500+ units, each with its own individual title. Having your own title means you can buy, sell, or rent your unit without restriction.
Banks favour this ownership model because they are the most liquid of the apartment property types.
Additionally, the Canada Mortgage and Housing Corporation (CMHC) offers mortgage insurance on most condos, allowing buyers to purchase with as little as 5% down.
Pros and Cons of Buying a Condominium:
- Ownership of an actual title (pro)
- Easy financing (pro)
- No restrictions on reselling (pro)
- No restrictions on mortgaging your unit (pro)
- Rules set by the condo board (e.g., pets, short-term rentals) (neutral)
- High purchase price (con)
Co-Ownership
Co-ownership buildings have a single title that is divided among the residents, so everyone owns a percentage of the property. Residents then have exclusive rights to live in their unit, but they don’t technically own the unit… they own a portion of the building.
Banks are generally willing to finance co-ownership properties, but CMHC does not provide mortgage insurance for these types of properties. Buyers will need a minimum of 20% down.
Pros and Cons of Buying a Co-Ownership:
- Ownership of a portion of the title (neutral)
- Freedom to buy, sell, and rent without board approval (pro)
- Banks offer financing (pro)
- Rules set by the co-ownership board (neutral)
- Rare property type (con)
- Typically older properties with higher maintenance fees (con)
- Lower purchase price (pro)
Co-Operative
Co-operatives usually come with the most restrictions. In a co-operative, almost every action—selling, leasing, or even taking out a mortgage—requires board approval.
While this may seem frustrating, board approval of all sales and leases can help the building control who moves in (and, more importantly, who does not).
In New York City, co-operatives are highly common and favoured for their restrictions. For example, if a high-profile individual like Donald Trump wanted to move into a building, the board could block the sale. This can protect residents from increased security risks, break-ins, and paparazzi.
In a co-operative, buyers purchase shares in a corporation that grants them exclusive rights to a specific unit, parking space, and storage locker. Major Canadian banks typically do not offer mortgages for co-operative properties. Buyers must explore alternative financing options, which often come with higher interest rates and larger down payments.
Pros and Cons of Buying a Co-Operative:
- Lower purchase price (pro)
- Strong sense of community (pro)
- Stability from long-term residents (pro)
- Strict rules (con)
- Limited financing options; board approval required (con)
- Typically older buildings with higher fees (con)
The Hidden Benefits Of Co-Operatives and Co-Ownerships
One of the biggest advantages of co-operative and co-ownership properties is location. These rare properties are often found in some of Toronto’s most desirable neighbourhoods, like Forest Hill. This means buyers can live in sought-after areas in solidly constructed apartments with concrete divider walls—for less than half the price of a condominium.
Challenges Facing Co-Operatives and Co-Ownerships
Unfortunately, it’s not economically feasible for developers to build new co-operative or co-ownership homes. Furthermore, rental legislation has made converting existing rentals into co-op or co-ownership properties increasingly difficult.
As the existing stock of these properties continues to age—especially those located on valuable land—we expect developers to approach owners with buyout offers to demolish and replace these buildings with high-density luxury condos.
Like always, it’s important to speak to a real estate professional before any purchase. Co-operative and co-ownership properties are usually older buildings, which, if not well-maintained, can have significant costs in the future.