Low mortgage rates, low returns on financial investments and the desire of many tenants to become homeowners are all factors that make investing in property and owning a home a natural choice. Furthermore, it is not uncommon for changes in life circumstances to prompt an owner to consider changing their home. Renting and owning are the most well-known options, but there is a third way to find housing: the housing cooperative. The objective here is to present, in brief, the main property ownership regimes in name as well as the functioning of the housing cooperative. Learn about the different ownership regimes.
The acquisition of real estate can be done under various legal forms. For individuals, there are essentially four forms of ownership: individual ownership, joint ownership, ownership by floors and common ownership. In essence, individual ownership relates one person to a piece of real estate, while the other regimes establish a relationship between several people and that real estate.
Under this system, only one person owns the real estate; it is registered as such in the land register. The owner assumes sole responsibility for the property.
The ownership of the real estate here is shared among several people. The real estate is not physically individualized; each co-owner has an “ideal” share of the whole, expressed as a %. All co-owners are registered in the land register. The co-ownership shares are usually based on the amount invested by each co-owner. This percentage can be recorded in the land register; otherwise, the shares are presumed to be equal. Each co-owner contributes proportionally to the costs of the building.
This is a special form of condominium ownership. Each floor owner has the exclusive right to use and arrange the interior of his or her unit, while respecting the rights of the other co-owners. He may also use certain areas of the building, called common areas. The floor share is expressed in ‰ of the value of the building; it is entered as such in the land register. Each floor owner bears a proportionate share of the common expenses related to the use, maintenance and management of the building.
Under this regime, the property is owned jointly and in its entirety by all the owners jointly. The owners are all registered in the land register, regardless of their investment. This form of ownership is most often the result of a contract, such as a marriage or simple partnership, or an undivided estate.
The owner registered in the land register is in principle the sole owner. Nevertheless, if the property is used as a marital home, the spouse/partner is protected by law and the owner must obtain his/her consent to dispose of it.
The co-owner may freely dispose of his own share. When one of the co-owners wishes to sell his share, the law guarantees a priority (right of first refusal) to the other co-owners. Decisions are usually taken by a simple majority. In addition, the provisions for the protection of the marital home also apply. Co-ownership brings together several users, whose rights relate to the whole thing, hence the relevance of defining rules allowing harmonious co-existence and the usefulness of agreeing on a set of administration rules.
The co-owner enjoys – almost – complete freedom in the use and management of his or her dwelling; however, he or she must be aware that he or she is bound by the decisions of the general meeting of the community of floor owners and by the administration and use regulations. These regulations generally define the decision-making process and the required majorities; individual will and majority will may not coincide. In addition, the provisions for the protection of the marital home also apply. Considering in particular the financial and legal parameters of this type of scheme, the appointment of a professionally qualified administrator is recommended.
The partners cannot freely dispose of their shares: decisions, for example a sale of the property, must be taken jointly. Common ownership therefore does not allow partners to freely dispose of their share. Each type of community, listed restrictively by law (heirship, family joint ownership, community of property between spouses, simple partnership, general partnership and limited partnership) is for the rest subject to its own legal rules.
The housing cooperative can be defined as a cooperative society with an ideal goal to provide its members with the best possible housing conditions at an attractive rent. The social capital of the housing cooperative is made up of the shares subscribed by its members, the cooperators. It is, in essence, an intermediate form of housing between traditional rental and ownership: The cooperative society owns the building. The co-operators are formally tenants; at the same time, as holders of shares, they make up the general assembly, the supreme body of the co-operative. Each member of the cooperative has one and only one vote; all the cooperators participate with equal voice in the decision-making and in the election of the board of directors. The members housed by the cooperative society also have greater security than in the traditional lease, since the qualities of cooperator and tenant are in principle linked. This type of entity intends to promote exchange and conviviality among cooperators, a solidarity among all as well as a shared sense of responsibility.
Any homeowner or future homeowner will favour certain aspects of operation that will define the most appropriate legal form for the acquisition of their home. The individual villa will be an obvious choice for some, while others will be more interested in a property in PPE, others still will be seduced by the housing cooperative. We recommend that you surround yourself with specialists (real estate professionals, lawyers, notaries) to guide you in your choices, which will still be guided by other parameters, such as financing, taxation, long-term objectives as well as the transferability of your home.
Sources: Me Jean-François Marti, in collaboration with Me Erin Wood Bergeretto, BM Avocats