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Co-ownership Caution ! - Purchasing Tenanted Units.



Co-ownership buildings can often look like attractive propositions for first-time buyers. The buildings are generally older, have larger units and generally sell for considerably less than comparable condominiums.


There are a number of technical differences that differentiate co-ownerships from condominiums: In a co-ownership the buyer purchases shares in a corporation that holds title to the building along with the contractual right to occupy an individual unit. The buyer however does not get title to the individual unit as with a condominium. This creates some practical challenges for purchasers in relation to the ability to obtain financing and other issues. Of particular note for the purposes of this discussion however is an often-overlooked provision of the Residential Tenancies Act (RTA) :


Pursuant to section 72 (2) of the RTA a purchaser or landlord of a co-ownership interest can only obtain possession of the unit from an existing tenant if:


  • The building contains not more than four residential units or

  • The person seeking possession, their spouse, one of their immediate family members or a person who provides care services to them previously occupied the unit.

This restriction can have disastrous consequences: In contrast to a condominium unit, a purchaser who buys a co-ownership interest in a building with more than four units is unable to obtain possession from a sitting tenant. This would leave a first-time buyer who purchased such a unit in the difficult position of having to keep the tenant in the unit they intended to live in and likely having to keep renting themselves somewhere else - A dire prospect for someone who may have undergone significant time and hardship saving for a down-payment on their first home. Worse yet the units usually offer poor returns as rental investments and are rent controlled.


If you are considering purchasing any unit with an existing tenant it is a good idea to get some expert advice prior to purchasing to determine your rights and get realistic strategies to deal with any issues after closing. I invite you to contact my office for a free consultation at 416-628-4835 or through my website to see if we are able to assist in your situation.

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