There is a reason most lenders will not touch undivided co-ownership properties - simply put, they can be difficult to manage and difficult to liquidate if bankruptcy occurs.
(Remember, when buying a undivided property, you're not buying the property itself, rather a share/portion of that property which is managed by the collective shareholders)
- Shared Mortgage: In an undivided co-ownership, shareholders are responsible not only for their own mortgage payments but for the loans of the other shareholders as well (since there is only one mortgage). They are also jointly responsible for repairs, and insurance. Should something go wrong with one unit, it could potentially be expensive for all shareholders and not just the home-owner that lives within in.
- Rental Law: When it comes to an undivided co-ownership building, Quebec law stipulates that you can’t reclaim your unit back from a tenant once you rent it out, regardless of how many months notice they are given, or whether you intend on living in the unit yourselves. For this reason, many ownership agreements for undivided condos will clearly forbid shareholders from leasing their units. Furthermore, while a mortgage is still being paid, the financial institution will also forbid you from leasing your unit.
So why would anyone choose an undivided co-ownership property?
To some investors, undivided co-ownership's are attractive because their property taxes are substantially lower. However, most buyers tend to prefer the financial security of a divided co-ownership. In a divided condo, property taxes are put aside each month so that collective money will be available for repairs and building maintenance. Management and preservation of the building is done as a shared task between all the co-owners of the building and the co-ownership syndicate (the condo corporation).