Why Can I Finance a Condo But Not A Co-Op?

Co-ops and Condos may seem similar, but legally they’re much different.  Both are typically suites in multi-unit buildings and in fact to see them, you wouldn’t know the difference.   But one can be easily financed and the other is almost impossible to finance.  Why?

In a Condo, or strata-titled property, the legal title to the unit is registered in the name of the owner.  This makes it easy for a lender to take this as security for a mortgage.  In a Co-Op, the title to building is held in the name of the Co-Op and the owner only owns an interest in the Co-Op and a related right to use their suite.  Unlike a Condo, the owner’s name does not show up on the legal title to the unit.  This is an important distinction because it makes it much more difficult for a lender to take effective security in the unit.  As a result, lenders tend to avoid them.

There is a reason that Co-Op units are marketed at prices that seem low for a neighbourhood, and that’s because the purchasers usually have to pay the full purchase price in cash.

If you aren’t sure about the title that your client has, it’s a good idea to contact a lawyer for advice.  If it’s something that can be financed, the underwriting team at Kokanee Mortgage would like to help.