Co-ownership by phases

A phased co-ownership allows the developer to spread the design of a real estate project over several years, and to modulate the pace of construction work according to the evolution of unit sales. This formula implies that the developer, rather than establishing once and for all the co-ownership he wants to create, proceeds in stages.

The co-ownership he creates as part of this real estate project evolves, during construction, before reaching its final form. Because of the complex legal structure, only lawyers and notaries who are fully knowledgeable in the applicable rules of the field should act.

A phased co-ownership is also beneficial to consumers. From the time the first buildings are developed, buyers usually know what to expect about the direction of the project, its location and the nature of the buildings to come. This protection is important because if, for example, a developer were to suffer a setback, his successors would be required to honour the original plans and respect what was represented to first-time buyers.

Two methods are particularly used to carry out a phased co-ownership project: the so-called "Landry method" and the method of concurrent co-ownership declarations.  Let's look at them summarily.

A) The method of successive changes to the declaration of co-ownership (Landry Method)

This method consists of announcing, in a single declaration of co-ownership, that future changes will be made to ensure the construction of the future phases of real estate development. It aims to establish a single co-ownership.

The implementation of this method usually takes place as follows:

  1. A first building is built on a part of the land used for the real estate development;
  2. A declaration of co-ownership published at the land registry;
  3. This declaration of co-ownership affects not only the lot where this first building is located, but also the land where the other buildings will later be built (these are called "transitional lots"). The declaration of co-ownership already gives a relative value to these other lots;
  4. On one of the lands identified in the declaration of co-ownership as a transitional lot, the developer then builds another building, for the second phase of the project;
  5. After the construction of this second building, a cadastral operation is carried out and the declaration of co-ownership is amended to replace the description of the lot by the description of the private portions located in the newly constructed building, as well as the description of the common areas associated with it;
  6. During this replacement, the relative value of the land on which the second building was built is divided among the private portions that replace it, so that the relative value of the private portions located in the first building does not have to be changed;
  7. Steps 4, 5 and 6 are repeated for all other phases of the project until it is completed;
  8. Once the project is completed, the buildings form a whole regulated by a single declaration of co-ownership.

The use of this method therefore results in multiple changes to the declaration of co-ownership, as long as the project is not fully completed.

B) The method of concomitant declaration of co-ownership

The method of of concomitant declaration of co-ownership is to create new co-ownership on different private portions of an already established co-ownership. The implementation of this method usually takes place as follows:

  1. A so-called "initial" declaration of co-ownership is published on land, thereby creating a syndicate of co-owners;
  2. One or more lots constituting the various private portions of this co-ownership are then the subject of a cadastral operation with the aim of subdividing them and creating, on these private portions, different co-ownerships from the initial co-ownership; these subsequent co-ownerships are called "concomitant";
  3. Although the concomitant co-ownerships are different from the initiaco-ownership, they continue to be part of it;
  4. The creation of concomitant co-ownerships on the private lots of the initiaco-ownership does not require the modification of the initiaco-ownership declaration, but the publication of a concomitant declaration of co-ownership on the private portion concerned;
  5. The person who buys a lot in one of these private portions is therefore part of two co-ownerships: the initiaco-ownership, on the one hand, and the concomitant co-ownership in which the lot he bought is located, on the other hand;
  6. A syndicate of co-owners is created for each  concomitant co-ownership, which means that there are two levels of management jurisdiction: a syndicate for the entire initial co-ownership, with certain powers over all the co-owners, and a syndicate for each of the concomitant co-ownerships with certain powers, but only with respect to the co-owners who are part of it.

C) The cumulative application of these two methods

It is also possible to use both methods cumulatively in the same project. In the context of a co-ownership, certain private portions are designated as transitional lots and will be the subject of a subdivision which will then be incorporated into the co-ownership, by amending the initiadeclaration of co-ownership. Other private portions will be used to establish concomitant co-ownerships that will not be modified in the initiaco-ownerships.

WHAT YOU SHOULD KNOW  The development of a phased co-ownership, spread over a more or less long period of construction, involves a phase-in construction where buildings are being completed and land waiting to receive the construction site. For the latter, notarial practice has introduced the technique of transitional lots. These are lots, often consisting of bare land and described as a private portion, which will be replaced by final lots once construction is completed.

 

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