John B. Joseph

Most recently, I was involved in 2 condominium sales of a different nature. The "Villeneuve" project is a renovation/restoration project of some 47 units on 3 Streets in Montreal. The buildings are triplexes (3 units per building). On Villeneuve Street they extend from Jeanne Mance eastward to the next Street which is Esplanade. Bordering this row of buildings on both Jeanne Mance and Esplanade are 2 semi-detached buildings on each Street.

A unique feature of this complex: a boiler heating building at the back with a studio condo unit newly added within. This is the central water boiler heater for all units within the complex. I understand this was the first and now only remaining exterior central heating unit left in Montreal and therefore quite unique, adding to the historical value of the complex.

The interesting part for the real estate community is how the complex was re-structured by the renovator to allow current renters to remain while the complex was slowly renovated for resale.

Consideration had to be given to the city's requirement to maintain the boiler room building within the complex and to respecting the province’s laws. To accomplish this, a Horizontal condominium association was formed to account for the common areas within the complex including the boiler building. As the renovator's intention was to sell off all the units, they then created an undivided structure for each triplex (building with 3 floors, 3 units). This was called the Vertical condominium association and there is one for each building.

A little segue here for explanation: The law in Quebec does not allow a building to be a divided condo unless there is a resident owner for each unit within a building. Should a condo association agree to allow its owners to rent out their condos then it is okay as it is within the rules of the government’s definition. This undivided status allowed the renovator to sell off one unit at a time within a building.

The way this was done was for the renovator to own unsold units, rented out or unoccupied, and for new condo owners of units to own the building together within the undivided category. Once all 3 units in a building are sold, they can then apply to be converted to divided condo status with the government. For more information on the difference between Undivided and Divided condominium status in Quebec, please read my blog titled: “Condominiums: What are the Types of Co-Ownership in Quebec”.

Photo below:
The photo at left shows the old storage sheds restricting views out the back. The photo at right is the most recent. The balconies were opened up and smaller storage sheds installed. A new fence, balconies, stairs and courtyard and other improvements have rejuvenated the outside space and complex. Above the old boiler room, black framed door and window at bottom, has been converted and sold as a condo unit.

The term Condominium is used in Quebec to describe shared co-ownership. There are 2 categories set out by the Quebec government with very distinct differences.

Divided co-ownership is the right of ownership held by many people ("co-owners"). Each co-owner owns a fraction (%) of the property that is physically divided into a private portion and a share of the common portions. The private portion is typically determined from the gyprock walls inward. A condo association ("syndicat" in French) is established to govern the building's common areas and to set rules of conduct and process. The government has fairly strict rules on how divided condo associations must manage the building and owner relationships.

Undivided co-ownership is ownership of the same property, jointly and at the same time by several persons or companies called "undivided co-owners", each of whom privately owns a share (percentage) of the right of ownership and not a physical division of the property. The governance of this category can be less rigidly structured depending on the owners viewpoints on how to manage theier shared property.

One most notable difference between the two are the property taxes you can expect to pay. A divided co-ownership property can expect to pay almost double that of an undivided property.

When it comes to mortgage such properties, the government has more restrictions placed on undivided properties to protect its citizens. The mortgage must be held within one financial institution who has a set of rules to follow. Clients are never thrilled about this, even if however, it is to their benefit.

Some undivided property owners will want to convert their property to divided status so that it will sell eaiser and / or to sell for more. The property must then be converted. This process is done with the government, and can take a number of months and cost $7,000 - $10,000 to complete.

As here in Quebec we follow the French originating Civil Code and not British-based Common law, property and ownership have different perspectives from a law point of view. There are subtle differences in many jurisdictions and so it is important to consult with local real estate agents to learn more about the sector you want to live in.

For an interesting real-life variation and use of these 2 co-ownership categories, please read my blog titled: "Divided and Undivided Condominiums Together in One Complex in Montreal".

Has it been suggested your home will sell for more? What facts have been given to support that sales price? What factors and who will determine the final sale price? While the answer is not an exact science, reliable factors have influence as do the buyers who set the final price. Established agents know prices in their sector, but can they explain them to you and make it all add up?

Factors such as market state (buyer, balanced, seller), property location, property condition and type, décor and motivations will affect the final sales price. For example, if a seller is caught and absolutely has to sell, the motivation to sell for less exists. Likewise, if a buyer absolutely has to buy, then they will likely be willing to pay more. These can be fun conditions for the winning party however, in most cases, the home sells close to its real value. Why then, would a seller expect their home to sell above real value?

The question should always be asked as to why a buyer should pay more for your home ?The answer lies in what adds value to a home and what serves only to differentiate it from the competition? Certainly, properly presented, well-maintained with current, neutral décor sets you above the rest, however, it is not worth a premium; it places the property in the upper selling range. Do you have a garage, extra living area, another bathroom, extra land, a great view or something adding capital to the property? These are factors deserved of a premium.

In the end, sales price can be whittled down to the appropriate selling range plus a justified premium, and then a speculative component in an ascending market, or discount in a descending market. The price component that kills listings and sellers confidence is an emotional attachment with a dollar value or a wing-and-prayer promise to get you more for your home. A good agent will identify these components to help you set reasonable expectations and a fair dollar value on your home. When it sells, you should know why.

In Quebec, mandatory forms are prescribed for the sale of residential real estate. The request for a Buyer's inspection is provided by a clause that our laws help define. Buyers and Sellers have to agree on, as part of the negotiating process, the number of days delay to allow the Buyer to complete the inspection and inspection report review.

Buyers should be careful when deciding on the delay to specify in an inspection condition when writing a Promise to Purchase. The delay should be long enough to allow for negotiations if repair work is identified during the inspection.

For example, if you request 7 days total in the inspection clause, the inspection is performed on day 5 and it takes 2 more days to receive the report, then, according to how the condition is written, your review time is finished. The 4 days mentioned that follow this delay are only there to provide a delay to advise the seller in writing to void the Promise to Purchase due to issue(s) discovered that may significantly reduce the value of the property.

Should a condition be identified that could potentially devalue the property, then the Buyer might want to engage a specialist to provide a deeper understanding of the problem and risk. To do so, the Seller must agree to provide an time extension to the Buyer. The Seller is not obliged to do so.

For this reason, a Buyer who has not negotiated enough time, at the outset, to investigate potential areas of concern risks the ability to understand a potential problem and the transaction may be at risk of failing. To reduce the possibility that this situation occurs, agents should be able to explain to both Sellers and the Buyers the ramifications of this clause before entering into a Promise to Purchase.