We’re all familiar with the old adage, “a person’s home is their castle.” But the fact is, not everyone has the same rights to do to their “castle” what they will. Depending on just how you own that castle, you may or may not be free to renovate as you see fit. There may be restrictions on how you can change the layout or build an addition. You may not even be able to place a “for sale” sign in your own window. And you may even have to put in some volunteer hours to earn the right to stay in your home.
Knowing what's out there and what it all means is the first step to smart homebuying. Here’s a look at the kinds of home ownership that exists in Ontario.
This is the type of ownership your parents and grandparents knew about when they went out and bought themselves a home. The property is totally yours, along with all the bills and responsibility to keep it properly maintained.
You fully own the property and the land on which it sits, as well as any other buildings that are on that land. If you want to make changes to your property, it’s yours to do what you want with, within the usage limitations the municipality imposes through its zoning bylaws.
Condominiums have become increasingly popular in recent years with all age groups, especially hip, young first-time buyers, empty nesters and retirees. Condos can be apartments, townhomes or even detached homes. “Condo” refers to the type of ownership, not the kind of architecture.
The condo owner receives a deed to an individual unit within a larger complex. The owner possesses everything inside the walls while the owners as a group, or condo corporation, jointly own the common areas.
First-time buyers like condos because they often offer a less expensive way to enter the ownership market than buying a home, and many are located in city core areas near entertainment, bars and restaurants. They are popular with retirees or empty-nesters who enjoy the freedom to go away for an extended time without worrying about upkeep.
Monthly fees levied to maintain the common elements can be seen as a positive or a negative factor: While they might seem to be an added regular cost, they also free the owner from having to dig deep when repairs need to be made.
Some find the rules established jointly by the owners restrictive and a limitation on their freedom. For instance, it is not uncommon for a condo association to prevent owners from placing a “for sale” sign in their own window or to limit the type of pet they may have.
These are similar to a condo. Co-ops award each owner a share in a company or co-operative venture. The co-op is a property containing a number of housing units, with each shareholder assigned one particular unit in which they reside.
Co-ops are different from condos, however, in that the individual owner does not own any real estate directly. Instead, a corporation or trustee owns the property and the individual owns a share. The similarity lies in the fact that a board of directors is elected by the members to decide on how the facility will operate. The two are different, however, in that often, the monthly fees include the cost of servicing a blanket mortgage taken out when the property was built.
Some co-operatives require that each owner put in a set amount of volunteer hours toward the operation of the co-operative.
It’s been around for about 25 years but life lease continues to suffer from a low profile. Used primarily for seniors’ residential communities, life lease allows the buyer to purchase an interest in their community and their own unit. A life lease can be passed on to heirs or sold at any time.
Just as a deed is registered on a condo or freehold home, a life lease can be registered on title to the property. The difference is the life lease property remains in the name and under the control of a non-profit organization. The organization entices buyers by providing a safe, enclosed community with access to medical, social and other services and activities targeted to older people.
RECREATIONAL PROPERTY OWNERSHIP
Fractional ownership and timeshare are two types of ownership typically used in the recreational property field.
In timeshare, the purchaser buys the right to the use of a property, typically a resort condominium, in which multiple parties hold similar rights, with each shareholder allotted a period of time for their usage. The purchaser may rent or sell this right of usage but does not actually own the real estate — just the right to use it at a designated time. Typically, the value of this right of usage does not increase over time and may decrease.
In fractional ownership, a property is owned and shared by at least two, and often several, individuals. Often a unit at a resort is divided into 10 or 12 fractions, with individual buyers owning perhaps one-quarter of the allotted weeks annually. Unlike timeshare, you actually own a portion of the property — your unit. And partially because of the relative newness of the concept and the high demand, the value of these fractions has tended to rise.