The payment of common expenses (or condo fees) is probably the most well-known obligation on the part of a co-owner.
When visiting a condo for sale, one of the main questions for potential buyers is how much will have to be paid monthly for the payment of common expenses.
Indeed, no one wants to pay a high amount and a building with low condo fees is often given increased importance.
But it is often in these cases that the contingency fund is insufficient.
Usually, this perception of co-ownership does not reflect the building’s administration that is intended to be sound and efficient.
Under article 1064 of the Civil Code of Québec, the basic principle is established to the effect that:
” each of the co-owners contributes, in proportion to the relative value of his fraction, to the expenses resulting from the co-ownership and the operation of the immovable, as well as to the contingency fund established pursuant to article 1071 (… )”.
Thus, it is precisely article 1071 of the Civil Code of Quebec that stipulates that:
« The syndicate establishes, based on the estimated cost of major repairs and the cost of replacing the common elements, a contingency fund, liquid and available in the short term, allocated solely to these repairs and replacements.
This fund is the property of the syndicate ».
Finally, article 1072 of the Civil Code of Québec indicates how the contribution to common expenses is established:
« Each year, the board of directors determines, after consulting the meeting of co-owners, the contribution of the co-owners to the common expenses, after determining the sums necessary to meet the expenses arising from the co-ownership and the operation of the immovable and the sums to be paid into the contingency fund.
The co-owners’ contribution to the contingency fund is at least 5 per cent.
100 (5%) of their contribution to common expenses.
To establish this, account may be taken of the respective rights of the co-owners on the common areas for restricted use (…) ».
By reading these three (3) articles, we can see that common expenses can be divided in two ways: common expenses for daily expenses, and those related to major repairs and the replacement cost of common portions that will be deposited in the contingency fund.
The sums in the contingency fund cannot therefore be used for anything other than what is provided for in the law.
Thus, it is forbidden to draw from this account to:
- pay a supplier who has provided services to the condominium,
- pay professional fees owed to a lawyer or notary,
- to pay for anything related to the day-to-day management of the condominium.
Another behaviour often observed in buildings held in divided co-ownership is to limit themselves to the minimum percentage provided for by law for the contribution to the contingency fund.
Thus, the directors are satisfied with asking for five percent (5%) of the contributions to common expenses and thus consider themselves satisfied with compliance with Article 1072.
The best way to proceed is for the Syndicate to establish a maintenance logbook where, with the help of a professional, a list of the common portions of the building and their approximate lifespan can be established.
He will be able to do the same for each of the common areas.
This way of proceeding will make it possible to realize that the legal minimum percentage is often insufficient to ensure the sustainability of the building.
The amounts deposited will be used to ensure that when the time comes, major repairs to the common elements can be made without having to ask for a special assessment from the co-owners.
Future condo buyers should be aware that high common charges related to the desired private portions may be a good positive indication.
The one that shows that the contingency fund is being seriously maintained, all subject to the necessary checks.
