Co-ownership by phases

The co-ownership by phases 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 his real estate project evolves, during the realization of the project, before reaching its final form. Because of the complexity inherent in this type of legal structure, only lawyers and notaries who are fully in control of the applicable rules in the field can act.

Two methods are particularly used by lawyers and notaries 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 the 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 condominium.

The implementation of this method usually takes place as follows:

  1. A first building is built on a part of the land used for real estate development;
  2. A declaration of co-ownership is then issued;
  3. This declaration of co-ownership affects not only the land where the building is located, but also the land where the other buildings will later be built (they are called "transitional lots"). The declaration of co-ownership already gives a relative value these other lands;
  4. On one of the lands identified in the declaration of co-ownership as a transitional lot, the developer then builds another building, constituting 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 land 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 the 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 land transaction with the aim of subdividing them and creating, on these private portions, different co-ownerships from the initial co-ownership; these other co-ownerships are called "concomitant";
  3. Although the concurrent co-ownerships are different from the initiaco-ownership, they continue to be part of it;
  4. The creation of concurrent co-ownerships on the private lots of the initiaco-ownership does not require the modification of the initiaco-ownership declaration, but only the publication of a concurrent 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 concurrent co-ownership where the lot he bought is located, on the other;
  6. A syndicate of co-owners is created for each concurrent 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 concurrent 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 concurrent co-ownerships that will not be modified in the initiaco-ownerships.

WHAT YOU SHOULD KNOW  The development of a co-ownership per phase, 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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