Divided co-ownership, more commonly seen in what are called condominiums (condos), is enjoying significant growth in Quebec, in particular in the greater metropolitan region. The management of this type of building is quite different compared to single family dwellings. The collective management of buildings often comprising several hundreds of units can appear complex and using the services of a manager can also be of great help. However, past experiences have exposed shortcomings in the management of certain buildings and the transparency of the information available to new buyers.
Co-owner obligations
According to article 1071 of the Civil code of Quebec, “the syndicate establishes, according to the estimated cost of major repairs and the cost of replacement of common portions, a contingency fund to provide cash funds on a short-term basis allocated exclusively to such repairs and replacement. The syndicate is the owner of the fund.” In the report by the Working Group on Co-ownership of the Quebec's Chambre des notaires in 2011, there is a recommendation to make information regarding the syndicate's finances and several other aspects of co-ownership more accessible, allowing prospective buyers to purchase in full knowledge of the facts. Indeed, a point that buyers generally forget to check, simply because they aren'y conscious of the need to to do so, relates to the financial standing of the syndicate of co-ownership. The Chambre des notaries specifically proposed that a booklet for the new purchasers should be prepared with an aim of informing them on the buying process and about life in a co-ownership.
Co-owners contribute to the common expenses and to the contingency fund in proportion to the relative value of their fraction. Buyers should be wary of syndicates where condo fees are low. Although this may more attractive at first, this may lead to a low contingency fund balance, inadequate building maintenance and greater risk of unforeseen expenses in the future. When such repairs become necessary and when the contingency fund is insufficient to cover all the costs, the current owners will have to pay out of their own pocket. From this stems the importance of being well informed about the syndicate's financial situation and to access that information.
Building management
The collectivity of the co-owners of a building are referred to as a syndicate of co-ownership which is responsible for all of its administrative operations and the common interest of the co-owners. The syndicate acts via its Board of Directors and by the General Meeting of the co-owners. The day to day management of the syndicate is often entrusted to a manager, paid by the syndicate, with the aim of relieving the directors of the daily management tasks. The delegation of the management of a building should not result in a disengagement by the directors of the actions to be taken because this can lead to cases of fraud.
The media has recently reported several cases brought against building managers. In this respect, it is important to know that the manager acts under the terms of a mandate which is given to him by the syndicate and he the legal obligation to act with prudence, diligence, honesty and loyalty. The Civil code of Quebec formally prohibits him from exercising his powers in his own interest, and must never mingle his own property with that which he manages. A manager who contravenes these rules could be guilty of fraud could see themselves held civilly and criminallly liable.
There is a lack of specific standards regarding the management of co-ownerships, an obvious lack of knowledge by certain individuals who hold themselves out as managers and a lack of supervision by the co-owners. Indeed, in Quebec, anyone can manage co-ownerships, since no basic qualifications are required. From this stems the importance to keep a watchful eye on the manager and to entrust the management of the building to a qualified manager who has the required knowledge, in particular in the fields of the law of co-ownerships and accountancy. There are civil and criminal standards regulating the actions of the managers.
Changes to come
One of the reasons committee set-up by Quebec's Chambre des notaires last autumn the importance to make the organization of the syndicates more transparent. One proposed there also the installation of an organization, such as a Régie of co-ownerships, which could, among other things, prepare information made available to the administrators. In the same way, one has recently announced the preparation of a new bill framing the administration of buildings with condos for better protection of the public. A good quality of management of the syndicate will influence, in addition, to your quality of life, the maintenance of the value of resale of the condos, a stability and a bond of confidence between the Board of Directors and the co-owners and an equity in the division of the costs of major works, because adequate contingency funds will have ensured the availability of a cash-flow at the right time.
Prudence
The selection of your manager must be done with prudence. You must make sure that he has the experience necessary for the type of building of which you want to entrust management to him. To avoid any risk of embezzlement, you can require that the bank account will be yours and that the signatures of two members of the Board of Directors are necessary on the cheques. You can also ask for the copy of the liability insurance for errors and omissions of your manager. These checks and measures will normally enable you to avoid problems.
Sources :
http://rgcq.org/rgcq/nouvelles/41-montreal/379-fraude-en-copropriete-la-facture-29-novembre-2011-a-19h30(lien
externe)
http://argent.canoe.ca/lca/affaires/quebec/archives/2011/12/20111201-121334.html(lien externe)
Report of the Chamber of Notaries
Co-owner obligations
According to article 1071 of the Civil code of Quebec, “the syndicate establishes, according to the estimated cost of major repairs and the cost of replacement of common portions, a contingency fund to provide cash funds on a short-term basis allocated exclusively to such repairs and replacement. The syndicate is the owner of the fund.” In the report by the Working Group on Co-ownership of the Quebec's Chambre des notaires in 2011, there is a recommendation to make information regarding the syndicate's finances and several other aspects of co-ownership more accessible, allowing prospective buyers to purchase in full knowledge of the facts. Indeed, a point that buyers generally forget to check, simply because they aren'y conscious of the need to to do so, relates to the financial standing of the syndicate of co-ownership. The Chambre des notaries specifically proposed that a booklet for the new purchasers should be prepared with an aim of informing them on the buying process and about life in a co-ownership.
Co-owners contribute to the common expenses and to the contingency fund in proportion to the relative value of their fraction. Buyers should be wary of syndicates where condo fees are low. Although this may more attractive at first, this may lead to a low contingency fund balance, inadequate building maintenance and greater risk of unforeseen expenses in the future. When such repairs become necessary and when the contingency fund is insufficient to cover all the costs, the current owners will have to pay out of their own pocket. From this stems the importance of being well informed about the syndicate's financial situation and to access that information.
Building management
The collectivity of the co-owners of a building are referred to as a syndicate of co-ownership which is responsible for all of its administrative operations and the common interest of the co-owners. The syndicate acts via its Board of Directors and by the General Meeting of the co-owners. The day to day management of the syndicate is often entrusted to a manager, paid by the syndicate, with the aim of relieving the directors of the daily management tasks. The delegation of the management of a building should not result in a disengagement by the directors of the actions to be taken because this can lead to cases of fraud.
The media has recently reported several cases brought against building managers. In this respect, it is important to know that the manager acts under the terms of a mandate which is given to him by the syndicate and he the legal obligation to act with prudence, diligence, honesty and loyalty. The Civil code of Quebec formally prohibits him from exercising his powers in his own interest, and must never mingle his own property with that which he manages. A manager who contravenes these rules could be guilty of fraud could see themselves held civilly and criminallly liable.
There is a lack of specific standards regarding the management of co-ownerships, an obvious lack of knowledge by certain individuals who hold themselves out as managers and a lack of supervision by the co-owners. Indeed, in Quebec, anyone can manage co-ownerships, since no basic qualifications are required. From this stems the importance to keep a watchful eye on the manager and to entrust the management of the building to a qualified manager who has the required knowledge, in particular in the fields of the law of co-ownerships and accountancy. There are civil and criminal standards regulating the actions of the managers.
Changes to come
One of the reasons committee set-up by Quebec's Chambre des notaires last autumn the importance to make the organization of the syndicates more transparent. One proposed there also the installation of an organization, such as a Régie of co-ownerships, which could, among other things, prepare information made available to the administrators. In the same way, one has recently announced the preparation of a new bill framing the administration of buildings with condos for better protection of the public. A good quality of management of the syndicate will influence, in addition, to your quality of life, the maintenance of the value of resale of the condos, a stability and a bond of confidence between the Board of Directors and the co-owners and an equity in the division of the costs of major works, because adequate contingency funds will have ensured the availability of a cash-flow at the right time.
Prudence
The selection of your manager must be done with prudence. You must make sure that he has the experience necessary for the type of building of which you want to entrust management to him. To avoid any risk of embezzlement, you can require that the bank account will be yours and that the signatures of two members of the Board of Directors are necessary on the cheques. You can also ask for the copy of the liability insurance for errors and omissions of your manager. These checks and measures will normally enable you to avoid problems.
Sources :
http://rgcq.org/rgcq/nouvelles/41-montreal/379-fraude-en-copropriete-la-facture-29-novembre-2011-a-19h30(lien
externe)http://argent.canoe.ca/lca/affaires/quebec/archives/2011/12/20111201-121334.html(lien
externe)Report of the Chamber of Notaries