Several legislative changes have been implemented—or will be soon—to better protect condo owners.
These reforms aim to ensure condo building administrators apply best practices in terms of transparency and co-ownership management. Here is an overview of these newly enacted and upcoming regulatory measures.
Transparency and Maintenance
The Contingency Fund
Condo building administrators are expected to have a contingency fund study conducted by a qualified professional at the intervals prescribed in forthcoming government regulations. This study must mainly address the major repairs and replacements the building will need over the next 25 years. If the study finds that the fund is insufficient to cover these expenses, the administrators must add the necessary amounts to the condo building’s budget to ensure the fund is sufficiently endowed no later than 10 years after the date of the first study.
The Maintenance Logbook
Very soon, syndicates of co-owners will be required to keep a building maintenance logbook. Also drawn up by a qualified professional, it must include a description of the necessary maintenance work and at what intervals it should be carried out, as well as any major repairs and replacements to the building’s components planned for the next 25 years.
The Self-Insurance Fund
This provision is now in effect. It stipulates that a fund, separate from the contingency fund and the regular operating fund, be maintained at all times and capitalized to match the highest deductible provided for in the building’s insurance policy. This fund may only be used to pay this deductible in the event of a damage claim to the insurer, or to pay for repairs following damages if the decision is made to forgo filing a claim.
The Duty to Inform: The Attestation of Co-Ownership
Once this provision comes into effect, co-owners selling their unit will be required to provide an attestation from the syndicate detailing the building’s condition and financial situation to prospective buyers. This attestation must include certain information, such as the amount held in the contingency funds and how much is deemed sufficient according to the most recent contingency fund study; the amount defrayed by co-owners for common expenses over the previous two years; the building’s surplus or deficit as stated in the financial statements; the amount held in the self-insurance fund; the completed major repairs and those planned for the next 10 years, etc.
Why Have Condo Fees Increased Over the Past Months?
The introduction of measures compelling syndicates of co-owners to maintain an adequate contingency fund as led to a hike in monthly fees for many condo owners.
Some people have expressed unhappiness about this new reform. But it should really be seen as a win for the building’s financial stability:
This rise in monthly condo fees is good news and also protects new buyers. In the past, unreasonably low condo fees weren’t uncommon, resulting in financial insecurity. This could lead to nightmarish situations for new buyers. Imagine, for example, having to pay a special contribution of $10,000 to replace the roof just a few months after moving in!
Notary
Why Are These Changes So Significant for New Buyers?
In short, all these measures offer future condo buyers nothing but advantages!
- Lower risk of unforeseen expenses: With better-managed contingency funds and greater responsibilities for syndicates of co-owners, new owners will face fewer unexpected special contributions.
- More transparency: Buyers can more easily access information about the condo building, its financial status, and its rules.
Stronger transaction protections: The rules governing promises to purchase and information disclosure enable buyers to reach a well-informed decision.
