A property of this type belongs to several individuals, called undivided co-owners. No one owner owns an exclusive portion of the property; rather, they each own a fraction. For example, you buy a triplex with two of your friends and you all contribute equally to the sale price. After the sale, you decide to move into the second-floor apartment. The apartment does not belong to you exclusively; your two friends share its ownership with you, just as you share the ownership of their dwellings on the first and third floors. You and your friends are undivided co-owners of the whole triplex (see illustration in white). In the example above, your shares in the immovable are one third each.
How do you create undivided co-ownership ? Undivided co-ownership of a property begins informally when several persons, the undivided co-owners, acquire ownership of the same property. However, where an immovable is involved, it is in the interests of the undivided co-owners to draw up and register a formal agreement among themselves. The indivision agreement must be published to be enforceable against third persons.
Is each undivided co-owner free to hypothecate his or her share of property alone? The Civil Code of Québec provides that each undivided co-owner may hypothecate his or her share of the property alone. The other co-owners are thus in no way liable should the hypothecary debtor default. The law even gives them special rights.
Is each undivided co-owner free to sell his share? Each co-owner is free to sell or transfer his or her undivided share in the property, unless otherwise stipulated in the indivision agreement. However, the law provides, with some exceptions, that the other undivided co-owners may, within certain time limits, exclude the new purchaser by refunding the sale or transfer price and expenses. The undivided co-owners must exercise this right of redemption within one year from the sale or transfer of the share.
The indivision agreement may stipulate a maximum term of thirty years. However, the agreement may be renewed.
Contents of the agreement
What provisions may be usefully included in an indivision agreement?
The agreement may cover the following:
- the term of the agreement
- rights and obligations of the co-owners with respect to the enjoyment of the premises
- the sharing of maintenance and renovation
- the sharing of expenses
- the ownership of improvements
- restrictions on selling
- rules for administering the property
- rules governing division on termination of the indivision agreement
Your notary can advise you properly about the contents of the indivision agreement.