Over the past several years the Minneapolis condominium market has flourished. Depending on your circumstances, there are several types of condominium ownership arrangement you may want to consider before making a purchase.
A freehold or fee-simple arrangement of condo purchase is a type of ownership that entitles you to use the property for an indefinite period of time and to make improvements or developments subject to legislation, contractual obligations, or strata restrictions that the property may be subject to.
Although the larger majority of condominium owners seek a fee-simple purchase, others choose a leasehold agreement. In a leasehold agreement, the prospective buyer signs an agreement with the property owner in exchange for the right to use the land for a fixed period of time. Any conditions or use restrictions, maintenance requirements, building construction and/or upkeep stipulations are noted on the contract. Under this type of agreement, the leasehold interest (the right to use the condo or property) can be purchased and sold, but ultimately, if this occurs, the new leaseholder is only purchasing the remaining time on the original lease and is subject to all original conditions of the lease.
Tenancy-in-common and joint tenancy are both shared ownership arrangements involving two or more people and present viable solutions to consider whether the purchaser is looking to split an investment, share a vacation home, or whether he or she looking for a boost to break into the real estate market.
In a tenancy-in-common arrangement, tenants can purchase what may be an unequal share in the condo property. For example, four people might each own a share of equal or unequal proportions of the property and thus have entitlement to access to the condo. Be aware though that under a tenancy-in-common agreement, if a partner wishes to sell or mortgage their interest in the property, they can do so under a legal process called “partition”, whereby the courts may order the property sold and the net proceeds of sale be divided proportionately among the interests. This kind of agreement is often used to help condo owners access expensive or desirable areas that may previously have been beyond reach.
There are also other forms of joint property ownership, including a co-op arrangement - an undivided co-ownership agreement where owners may share joint possession of a percentage of the entire property but have exclusive possession of a specific part. Co-op ownership brings with it a right-of-survivorship benefit.
Under a joint tenancy agreement, an owner has an undivided but equal share with other owners and maintains the right of survivorship. Joint tenancy entails more or less a blanket equal share among all partners: the entire property belongs to each of the owners. Each joint tenant has their signature on the property title, which, itself, will clearly state that they are joint tenants and that each maintains rights to possession. It is important to be clear on the conditions of the joint tenancy because if any stipulations are not met, the agreement may in fact be a tenancy-in-common. Under a joint tenancy arrangement, you can resolve your share by mortgaging or selling your interest to one of the other joint tenants or to another buyer outside of the original agreement. Be aware though, that by selling or mortgaging your interest you may upset the original agreement and cause it to revert to a tenancy-in-common.