Co-op properties can have two meanings: in one definition Co-ops are social/subsidized housing but the other definition refers to Co-operative Housing Corporations. In this post I’ll be talking about Co-operative Housing Corporations because this is the type of Co-op that you can buy and sell in the Vancouver real estate market.
What is a Co-op?
A Co-op is a Cooperative Housing Corporation that owns a building and the land. The building owners are shareholders in the Corporation who own shares associated with a particular unit. There are both Articles of the Corporation detailing the structure of the Corp and an Occupancy/Lease Agreement detailing the shareholders rights and regulations as residents. Annual and Special General Meetings are held where shareholders vote on various decisions pertaining to budget and financial matters, changes to the rules and regulations, building maintenance and the election of a Boards of Directors. The Board of Directors meet regularly to keep up with standard building management decisions. Co-ops can be self managed or they can also hire professional for property management, accounting, etc.
Where can you find a Co-op building?
Most Co-ops in Vancouver are found in the West End and Oakridge area, but you’ll also find a handful in other areas like Fairview, Kitsilano, Kerrisdale, etc.
Who should buy a Co-op?
The most ideal candidate for co-op properties are downsizers who are looking for a quiet, secure property to own for a cheaper cost than a Strata property, that doesn’t de-value like a Leasehold.
Co-op properties are also good for parents looking to purchase a more affordable housing option for a family member that – again – will not de-value over time like a Leasehold.
Difference Between Co-op and Strata Buildings
| Co-op | Strata | |
| Land | Owners own shares in a company (Corporation) that owns the land and the building. | Owners own a percentage of the land and building |
| Rules and Regulations | Co-op buildings have Articles, Rules and Regulations and Lease Agreements which dictate how the building is managed and the rights of each resident. These buildings follow the Cooperative Association Act NOT the Standard Strata Property Act. Co-ops are generally very strict on rules regarding pets, rentals, age of owners, etc. Potential Owners have to go through an interview process with the Board of Directors to gain approval to transfer shares, so every Co-op purchase will be subject to receiving Board approval. Owners in Co-op buildings get to vote on new rules, financial matters, etc. If you fail to pay your dues, violate the occupancy agreement or act detrimentally to the Co-op, the Corporation can force the end of your membership. | Strata buildings must follow the Strata Property Act when it comes to how the building is managed. Strata’s are not allowed to interview potential Owners. Owners in Strata buildings get to vote on new rules, financial matters, etc. If you fail to pay your strata fees, the Strata can fine you and eventually put a lien on the title to recoup the funds. |
| Size | Because Co-op’s were popular in the 1950’s and 1960’s they are all generally small 3-4 storey wood frame buildings, though high rise concrete exceptions exist (see Ocean Towers at 1835 Morton in the West End and Oakmont Plaza and Mansion House near Oakridge) | Strata’s can be anything from a 2 unit complex to a high rise complex offering hundreds of units. |
| Style | Co-ops typically do not have balconies or in suite laundry, have limited parking and may or may not have elevators and amenities (both are common in high rise Co-ops). These design decisions are mostly due to the ~1960 construction year rather than the fact that it’s a Co-op. | Can be anything from townhouses to concrete high rises. |
| Mortgage Financing | Buyers typically need at least 35% down. Not every mortgage lender will finance Co-op purchases. | Generally easy to mortgage. |
| Costs | Co-ops are typically cheaper than comparable strata properties, but Lawyers Fees for the transfer of ownership are typically quite a bit more expensive (often double, if not more) due to the extra work required at closing. | The most expensive type of Ownership. Lawyers fees are standard. |
| Property Transfer Tax | Property Transfer Tax (PTT) may or may not be payable on Co-op purchases, depending on how the Corporation is structured. | Property Transfer Tax is always payable unless the Buyer qualifies for an exemption. |
| Yearly Property Tax | Applicable and paid by the Corporation, but funded through the monthly maintenance fee or a yearly special levy from Owners. Owners may still be eligible for City of Vancouver Home Owner Grants. | Applicable, and paid by the Owner. Owners can receive City of Vancouver Home Owner Grants, if the property qualifies. |
| City of Vancouver Empty Homes Tax | Not applicable if at least one unit in the building is occupied, though this information should be verified with a Tax Lawyer prior to purchasing the Co-op if you may be leaving it vacant for a period of time each year. For more information, see the City of Vancouver EHT Exemptions under “Properties with Multiple Dwellings”. | Applicable, unless the Owner qualifies for one of the exemptions. |
| BC Speculation and Vacancy Tax | Likely not applicable, but it’s unclear, and should be verified with a Tax Lawyer. For more information, see the BC Speculation and Vacancy Tax Exemptions for Individuals and Corporations. | Applicable, unless the Owner qualifies for one of the exemptions. |
If you have any questions about Co-ops or are interested in purchasing a unit in a Co-op, please don’t hesitate to ask me: 778-387-7371 or kristi@realestatevancity.ca.