Pay Dirt Series – Mortgage of a Co-op Property

If your new client wishes to purchase or refinance an ownership interest in a co-op property, your application will likely be declined by lenders.  These properties are often attractively priced so they’re attractive to young and first time buyers.  If you can finance a strata-titled property, why not a co-op?

Simply put, an ownership in a co-op property is not a direct interest in title.  What you own is an interest in the co-op (usually a corporation) and the co-op holds title to the property.  Together with your interest in the co-op, you get a right to occupy a certain unit in the development.  So it feels like ownership because you have exclusive use of your unit, it may look like a strata development, and you can buy and sell those interests.  But since lenders can’t register a direct interest in the title, they typically will not finance these.

For co-op financing requests, your borrower will likely need all cash to purchase.