For housing co-operatives with an Index-Linked Mortgage (ILM), the expiry of operating agreements is a complicated affair – more so than for their S95 Program cousins. To understand what happens at the end of your operating agreement, begin by looking at the agreement version your co-op signed. There are two possible versions and you can find your version on the Agency’s password-protected client website. Your operating agreement and your mortgage do not necessarily end at the same time therefore it is important to check the terms your co-op’s own ILM operating agreement to know when your agreement will end.
In one version, the ILM operating agreement ends when the mortgage is fully repaid or up to 35 years after your co-op started paying back the loan, whichever is earlier. It is important to note the date when your co-op started to repay the mortgage because when that day comes, the operating agreement will end even if you still owe money on your mortgage. For example, if your mortgage repayments started on November 3, 1985, your co-op’s operating agreement will end on November 3, 2020.
In the second version, the ILM operating agreement ends when the mortgage is fully repaid or 35 years from the date of the operating agreement, whichever is later. So your mortgage could be paid off before the operating agreement expires, although in some cases it happens at the same time.
Look for the Term of Agreement clause near the end of your operating agreement to find out which version your co-op signed.
Rent supplement arrangements are set out in a separate agreement with its own term. If your co-op is in British Columbia or Alberta, your rent supplement agreement is with your province. ILM co-ops in Ontario and PEI have agreements with Canada Mortgage and Housing Corporation (CMHC). The Rent supplements themselves are administered by the Agency. Rent supplement agreements run for 35 years from the date when your co-op started to make mortgage payments.
Once you have repaid your mortgage, normally your co-op will no longer receive Federal Assistance. However, for some co-ops whose mortgages were repaid after April 1, 2016, CMHC extended Federal Assistance to March 2020. During the extension period, the amount of Federal Assistance is fixed at the level in the final year of the ILM mortgage.
Please contact your relationship manager for an End of Operating Agreement presentation tailored especially for your co-op.
You can review the Q&A on the End of the ILM CMHC Operating Agreement here