The difference between divided and undivided co-ownership

The difference between divided and undivided co-ownership is as simple as whether or not the property has been split into both private and common "areas". Both types stem from the concept of a group of people owning a particular immovable property, but the legal and financial details are poles apart. You should know how and when to differentiate the two.

The basic idea of divided co-ownership is that the property is divided into two different spaces: the common area and private areas. The latter areas usually belong to the respective owners of the property and are limited to specific apartments contained within the condominium. This private area may also include a balcony, outdoor area or parking space. Each co-proprietor has a responsibility for his or her mortgage.

On the other hand, the common space includes all the facilities within the condominium which are shared but not owned by any particular proprietor. This might include the pool, gym, garden, entry hall and stairwell.

Because all co-owners are expected to pay condo fees on a regular (monthly) basis, the common area is taken care of by the co-owners and is seen as a collective effort. The management and preservation of a property like this is organized by a co-ownership syndicate.

Opposing the concept of divided co-ownership, undivided type of ownership does not include property rights in any one part of the building. In other words, there are no private areas within the property. Instead, the entire building is managed, administered to and preserved by all the proprietors.

In this instance, unlike divided co-ownership, no single owner is solely responsible for his or her individual mortgage. Instead, all co-owners are responsible for a single mortgage for the entire property which is paid to the financial institution collectively. Of course, the said institution will take the financial capabilities of the group of co-owners into account before agreeing to a contract of ownership.

This type of agreement is better run as a group, as co-owners are not required to pay ownership fees. Because this is the case, undivided co-ownership deals require an ownership agreement. Signed by the co-owners, this agreement states exactly how the building will be managed, how it will be used, which parts of the building are reserved for which owners and so on.

What you choose really depends on personal preference. If owning a single unit within a property makes more sense than owning a share of a property, then maybe divided co-ownership would be a better deal for you. Of course, lower tax bills might be the deciding factor, in which case undivided co-ownership might be the right choice.