The financial documentation

To avoid financial problems, it is important to verify, before your purchase, that the co-ownership has implemented sound management practices and controls of its expenses. To do so, you should ask questions to your vendor to find out if the syndicate keeps adequate financial records.

Current year budget (or “budget forecast”)

You should review carefully the current year budget (or “budget forecast”). In the case of a new divided co-ownership, the developer has the obligation to prepare a budget forecast, which shall include the detailed expenses of the targeted co-ownership. This budget must cover the period from the day on which the declaration of co-ownership has been registered at the Registry Office.

This first budget must include a statement of the debts and claims, a balance sheet and the information on payable common expenses. It shall include the contributions to the contingency fund. For subsequent budget forecasts, please refer to the factsheet Budget forecast and expenses of the co-ownership.

Statement of income and expenditures of the syndicate (or “financial statements”)

The study of the financial statements makes it possible to assess the financial health of the co-ownership, distinguishing, on the one hand, the situation of the treasury and, on the other hand, the statement of debts and claims.The syndicate must prepare and make available financial statements, including a balance sheet, the income statement for the preceding financial period and a statement of debts and claims. However, the Law does not provide any specific requirements in relation with these financial statements, and does not specify who should prepare them. Some declarations of co-ownership provide that the financial statements shall be audited by a professional certified accountant, which shall proceed to an examination. This document will allow you to find out if:

  • The syndicate has debts;
  • The management of the immovable is in a situation of deficit;
  • Many co-owners have neglected to pay their common expenses;
  • The accounting is sufficiently detailed and kept in a logical manner in accordance with standard accounting rules;
  • There is financial information comparable with the preceding year or years.

Statement of common expenses for the immovable and the coveted unit

Obtaining the statement of common expenses will allow you to verify the common expenses payable in relation with the coveted fraction. If there are unpaid expenses, they should be adjusted between the vendor and the purchaser.

How can I obtain the required documentation?

The purchaser should have access to the register of the co-ownership through its vendor. To read up on this matter, please refer to the questions and answers which gives more information on how to exercise the right to consult the documentation of a co-ownership.

 

WARNING! When you purchase a new condo, you should have reasonable knowledge of the amount of the common expenses payable. In many instances, the amounts declared by the developer are lower than what they should be.

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