Drafting of an undivided co-ownership agreement

Co-ownership is a form of property right where co-owners each possess a share or fraction of the entire property. As a result, they jointly and concurrently own the same property, based on the percentage of the building they hold.

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The undivided co-ownership is a modality of property rights. Unlike divided co-ownership, the property is not physically divided among co-owners. Co-owners rather own a share, a fraction of the entire property. They are therefore owners, together and concurrently, of the same property based on the importance of the percentage of the building they own. A co-owner won't be able to claim they are the title owner of their housing unit and the undivided rights that come with that unit, but they are the owner, for example, of 20% of rights in the building and they occupy, with the other co-owners' agreement, a specific unit. An undivided co-ownership ends by partitioning the property.

This form of ownership is particularly common in the context of spousal relationships, estate matters, and company matters.

Signed by two co-owners or more, the undivided co-ownership agreement governs the operation of the undivided condominium and relations among co-owners. It has many similarities with a condominium declaration Each co-owner, unless otherwise stipulated, has the rights and obligations of an exclusive owner according to their share. Unless otherwise stipulated, co-owners will be responsible for common expenses according to their share.

In such type of co-ownership, there is no board of directors. All co-owners participate in the decision-making process and manage the property collectively. Decisions regarding the administration of the property are made by the majority of co-owners, both in number and shares. In order to sell it, share it, charge it with a mortgage or other charge, or change its purpose, decisions must be made unanimously. A manager can also be appointed to carry out simple administration tasks.

Unless otherwise specified in the undivided co-ownership agreement, the sale of a share does not require any authorization as long as it only affects the right of the co-owner making the transaction. An undivided co-ownership agreement will usually contain a right of first refusal which will require a co-owner who wants to sell their share to first offer it to their co-owners.

The financing mode of an undivided co-ownership can pose certain challenges. Creditors are hesitant to loan to co-owners without requiring the involvement of all other co-owners in return.

To guarantee their mortgage obligations among themselves, co-owners can use cross-collateralization. It will be granted by co-owners who will thus guarantee the payment of their mortgage obligations among themselves. It can be created at the same time as the undivided co-ownership agreement. However, it will need to be created under an explicit mention in the undivided co-ownership agreement. It is therefore important to note that cross-collateralization is not created solely by the co-owners signing an undivided co-ownership agreement.

The agreement may provide for a building regulation that will govern the enjoyment, usage, and maintenance of common areas and areas reserved for the exclusive use of a co-owner. It will also include the rules concerning the operation and administration of the condominium as well as the procedures for levying and collecting contributions to common expenses. It is enforceable to everyone, including tenants, as soon as they become aware of it.

Municipal and school authorities issue only one tax bill, co-owners being jointly responsible for the debt.

Co-owners are typically held responsible for their share of maintenance costs, common areas' repairs, building insurance, property taxes, and property management fees. However, no legislative provision prevents them from agreeing on different proportions among themselves.

It is therefore advisable to consult Notary-Direct because:

  • they are a legal advisor;
  • they will complete the necessary documentation to ensure that the drafting of an undivided co-ownership agreement is adequate;
  • they are required to have liability insurance.
If you need more information on this service, please contact us
514 374-4303
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