Condominium Living: Are You Keeping Up With the New Legislations?
The condominium market has undergone significant changes over the past decade. Across the province, there have been numerous construction projects, while many condo buildings have been aging and, in some cases, deteriorating. Faced with this situation, the world of divided co-ownership has undergone a major legislative reform. As a result, several sections of the Civil Code of Quebec have been amended or added in order to fill gaps, while clarifying the roles and responsibilities of the building's syndicate and the co-owners.
Find out how Bills 141 and 16 may affect you - but more importantly, how you can prepare for them - by reading this article inspired by Mtre. Catherine Santerre's and Mtre. Karl Michel's conference given at the QPAREB's June 2022 Forum Immobilier Résidentiel.
1. What Is a Divided Co-Ownership?
When you buy a condo, you are buying a fraction of a divided co-ownership. It consists of two components: the private portion - your unit - and a percentage of the common areas such as entrances, hallways and elevators. The latter also includes restricted common areas such as doors and windows.
These distinctions are essential in
establishing the responsibilities of the building's syndicate and the
co-owners. Not only will they have an impact when it comes time to insure your
condo, but they will also have an impact when it comes time to put it up for
sale.
2. Bill 141: Insurance
Passed in June 2018, Bill 141
is primarily focused on condominium insurance and includes new requirements,
such as:
- The addition of a sufficiently
precise description of the private portions so that the improvements made by
the co-owners are identifiable. This will allow, among other things, to
determine the sum indemnified by an insurer in the event of a claim.
- The obligation for the condominium syndicate to create a self-insurance fund which will be added to the existing operating and contingency funds. This fund is used to pay the deductibles set out in the insurance policies in the event of a claim and must contain the equivalent of the highest deductible of all the insurance policies taken out by the syndicate.
- The syndicate's subscription to insurance policies that provide for a reasonable deductible, which implies that the government could determine, by regulation, that a deductible is considered unreasonable.
- The inclusion of insurance coverage for the replacement value of a building, excluding improvements made by a condominium owner to their unit if these cannot be identified in the description of that unit.
- The evaluation of the value of the building must be carried out every five years by a member of the Ordre professionnel des évaluateurs agréés du Québec.
- The subscription to a liability insurance by the co-ownership syndicate to cover its responsibilities, as well as those of the administrators and other persons responsible for the proper functioning of the co-owners' assembly.
- The obligation to repair the damage caused to the insured property in the event of a loss, even if the syndicate does not wish to be compensated by the insurer.
- The obligation for the syndicate to demonstrate that the co-owner has committed a fault which caused a loss if it wishes to claim deductibles or obtain compensation in respect of that loss.
o Nevertheless, Bill 41, adopted in March 2020, amends Bill 141 by specifying that the syndicate benefits from a presumption against a co-owner when the loss emanates from their unit. However, the co-owner may rebut this presumption by showing that they were not at fault and were not negligent.
- The identification of primary insurers stipulating that a syndicate's insurance must intervene first when a property is insured by more than one insurer.
- Redefining the home of the insured, which specifies that an insurer cannot be subrogated to the rights of any of the following persons, against any other of them: the syndicate, a co-owner, a person who is part of a co-owner's home, or a person in respect of whom the syndicate is required to maintain insurance.
- The compulsory subscription to insurance by each co-owner to cover their liabilities to third parties. This amount is $1,000,000 for buildings with fewer than 13 fractions and $2,000,000 for buildings with more than 13 fractions.
3. Bill 16: Building Maintenance
Passed in December 2019, Bill 16
is primarily concerned with the rights and obligations of the building's
syndicate and co-owners regarding the maintenance of their property. This bill
introduces new requirements, such as:
- Keeping a building maintenance logbook that specifies the renovations that have been carried out in the past and those that will be carried out in the future.
- Conducting a contingency fund study every five years - by an expert identified in government regulations - to establish the estimated cost of major repairs to the common areas, without the need for special assessments. This requirement is not yet in effect; once adopted, syndicates will have three years to comply.
- The modification of the penalty clause which provides that it is included in the constitutive act of the co-ownership declaration, which will make it more difficult to modify in case of contravention.
- The division of responsibilities for the maintenance of restricted common areas between the building's syndicate and the co-owners.
- The obligation for the seller to provide the buyer with a certificate from the co-ownership syndicate as to the condition of the building.
- The right for the buyer to require that the syndicate provides them with information concerning the building so that they can make an informed decision.
- The obligation for the buyer to pay the common expenses at the time of purchase, as well as the interest that is due.
- The possibility for co-owners to obtain a copy of the co-ownership registry and the documents it contains, for a reasonable fee.
- The possibility for the syndicate to obtain, at its own expense, the plans and specifications of the building held by an architect or engineer.
- The mandatory transmission of the minutes of meetings of the board of directors and the co-owners' meeting to all the residents of the building within 30 days following the meeting.
- The modification of the building by-laws which must now be voted on at the co-owners' meeting.
Poorly maintained buildings, insurance deductibles that are difficult to pay, an avalanche of special assessments: changes brought about by Bills 141 and 16 will address many shortcomings in the management of condominiums. And although some of these changes will have an impact on condo fees, many condo owners will certainly see them in a positive light since a well-maintained unit will sell for more money … and sooner!
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