Real property and share in housing company: do you know the difference?

Estate agents are professionals that deal with a wide range of transactions. Real estate agents can be involved in the sale of apartments in blocks of flats, terraced houses, detached houses, holiday homes or plots of land. 

Real property (kiinteistö) and share in a housing company (asunto-osake) are key terms in the real estate brokerage business, and the difference between them is significant from a legal point of view. Do you know the difference between the terms? 

What is real property?

Real property, or piece of real estate is strictly speaking an independent unit of land ownership, such as a real property unit or plot of land on which a building or several buildings may be located. However, in everyday language, a property is often understood as a detached house or other building. In practice, however, the purchaser of a property usually buys a plot of land, which includes the buildings on it. 

As a real property owner, you are responsible for the maintenance and upkeep of your property. For example, you are responsible for waste management, water and heating contracts and charges, and property tax. These responsibilities bring housing costs for the property owner. In the case of a share in a housing company, the corresponding costs are included in the monthly charge. 

The law considers real property to be immovable property, while a share in a housing company is considered movable property. Real property transactions are carried out in writing in the presence of a public purchase witness. An exception is the case of rented plot, where the practice is slightly different and where, for example, no public purchase witness is required. 

Many different documents are needed for real property transactions. Important documents include the cadastral certificate, certificate of title, abstract of the register of mortgages, and building permits. The various documents should be studied carefully before finalising the transaction. 

What is a share in a housing company? 

A share in a housing company is indeed a share, as the name suggests, and buying a share in a housing company is actually a share transaction. Typically, a housing share gives you the right of possession to an apartment in a block of flats or a terraced house, but it can also be used, for example, for a semi-detached house or a group of several separate houses. 

Buying a share and living in a housing company has its own specific features, including the sharing of responsibilities between the residents and the company and the creation of common rules. 

As the owner of a share in a housing company, you are a co-owner in a housing company. This gives you the right to the possession of the apartment defined in the transaction, but it also gives you obligations. As a share owner, you pay a monthly charge, which consists of a maintenance charge and a potential capital charge. 

In many cases, it is possible to pay off the capital charge at the time of purchase, so that you only pay a monthly maintenance charge. The maintenance charge covers the costs of running and maintaining the housing company. The capital charge, on the other hand, covers the cost of renovating or modernising a building, for example. 

When buying a share in a housing company, you will need certain documents and you should study them carefully before finalising the deal. Key documents in a transaction of a share in a housing company include the house manager’s certificate, the articles of association of the housing company and the latest financial statements of the housing company. It is also worth checking whether the share is subject to any company loan or outstanding charges. 

By using a real estate agent for your home transaction, you can ensure that you have all the necessary documents for your review. The estate agent will also ensure that the transaction is concluded in accordance with the law. 

Read more:

Buying a share in a housing company: a house manager’s certificate 

Real property transaction documents