Definition : Interim director

The developer, who often acts as a interim director as long as he holds the majority of the votes of a co-ownership, will eventually have to transfer power to the future board of directors. The latter will be elected at a special transitional meeting, which must be held when the same developer loses the majority of votes in the building. As soon as the co-ownership is born, that is to say when the declaration of co-ownership is published in  the Quebec Land Register, the Therrien Couture Joli-Coeur team offers to take charge of all the steps relating to the start of the syndicate and the complete organization of the  first meeting of co-owners during which the transitional administration is terminated. Our firm can, as part of this service provision, guide the transitional director and the co-owners through each step of the start-up of your syndicate of co-ownership, and give you all the necessary advice to ensure an effective start of the co-ownership.

The law regulates the liability of contractors and building professionals for any problem related to the quality of construction work. In this regard, the legislator has provided for a specific protection regime for divided co-ownership. Section 1081 of the Civil Code of Québec recognizes the legal interest of any syndicate of co-owners to assert the rights of all co-owners to correct defects that appear, in the short or long term. This could occur during the initial construction of the building, or during work carried out several years after its erection. In short, when problems affect the common portions, the syndicate benefits from several legal warranties. Among them is the one against latent defects, design or construction defects. These warranties are worth their weight in gold, because very often, the cost of the work to be carried out in a co-ownership can be substantial.

Since last fall, work to complete the construction of our building has been stopped, while buyers of the top floor units were supposed to move in in December.  Question: Faced with the refusal of a developer or builder to complete the construction of the building, can the syndicate of co-ownership or any co-owner act in any way to either compel the builder to complete the work or obtain compensation?

Cette chronique vous est proposée par Garantie de construction résidentielle 10 décembre 2019 — Garantie de construction résidentielle (GCR) publiera dorénavant des chroniques sur Condolegal.com, afin d’aider les consommateurs à poser les bons gestes lorsqu’ils achètent un condo. Le premier sujet traitera de l’avis de fin des travaux des parties communes. Il s’agit d’une étape extrêmement importante, car elle coïncide avec le démarrage de certains volets propres à la garantie de GCR.

Whether you are a real estate developer (for a new building) or several owners of an existing building who wish to convert it, the rules for subjecting a building to divided co-ownership are the same. The creation of a divided co-ownership is necessary when an immovable must be divided into lots composed of a private portion and a share  of the common portions, and which belong to one or more different persons. The community of co-owners acquires the status of legal person from the day a declaration of co-ownership is published at the Land registry office (Land Register). The legal person thus constituted takes the name of “syndicate of co-owners”. Its mission is to ensure the " preservation of the immovable, the maintenance and administration of the common portions, the protection of the rights appurtenant to the immovable or the co-ownership, as well as all business in the common interest ". To form this co-ownership several steps involving many protagonists are necessary.

The presence of a Board of Directors is mandatory in a co-ownership. It is the executive body of the syndicate and its legal representative. Its members act as the mandataries of the syndicate. When a co-ownership is newly constituted, the declaration of co-ownership generally provides for the appointment of a interim director, who exercises the functions of the Board of Directors until the Meeting of co-owners appoints a new board of directors. This transitional period is generally delicate because of the necessarily numerous and complex problems relating to defects in workmanship, latent defects and construction defects. And this is not to mention that the transitional administrator set up by the developer may have a negative role: protect the developer and transfer to the co-ownership of charges incumbent in principle on the developer.  Its appointment Usually, it is the developer who designates him, in accordance with a provision in the declaration of co-ownership (By-laws of the Immovable). Often he appoints one of his  representatives to act as the interim director of the syndicate.

Expenses related to the maintenance and administration of the common portions of a co-ownerships start from its constitution as a legal person. It is therefore necessary that each co-ownership sets up, upon publication of the declaration of co-ownership, a Board of Directors to administer it. This board of directors is the executive body of the syndicate and its legal representative. Its members act as the mandataries of the syndicate. To ensure the star up of the syndicate, the developer usually designates in the declaration of co-ownership (by-laws of the immovable), one of its representatives to act as the interim director of the syndicate. His role is to accompany the co-owners, manage the co-ownership and see to the organization of the special transition meeting to elect the new directors to constitute the board of directors.

  Section 339 of the Civil Code of Quebec establishes as a basic rule that the term of office of a director is one year. The By-law of the immovable usually describe all the terms and conditions specific to the office of director, including the duration of his mandate. Thus, a syndicate of co-owners may, at the end of the By-law of the immovable, extend the duration of the building to more than one year (for example to two or three years). At the end of the stipulated term, the term of office shall continue if it is not denounced. Consequently, if no co-owner objects to the actions of the directors, they may continue to exercise the powers conferred on them. A director remains in office until the next annual meeting, whether before or after the end of one year. He is a director at the meeting until he has been replaced by the election of a new director in order to prevent the syndicate from being without a director in the event that the election cannot be held at that time as a result of an adjournment or otherwise.

Optional guarantee plans are sometime offered, for buildings not covered by the Guarantee plan for new residential buildings (compulsory guarantee plan). This form of guarantee is intended for those buildings comprising five or more superimposed private portions , and buildings renovated and converted into co-ownership (such as: abandoned factories, schools and churches). The optional guarantee plans are managed by the “APCHQ”, the “ACQ” and the “APECQ”.

The relevant information of co-ownerships must be declared with the “Registraire des entreprises du Québec” (the Québec Enterprises Registrar). This declaration is intended to render accessible  essential information, either to the public or enterprises that deal with the syndicate of co-owners. Furthermore, at the start-up of a syndicate, the Board of Directors must file – usually by the interim director – a declaration of registration in virtue of the Act respecting the legal publicity of enterprises. This must be done no later than 60 days after the publication of the declaration of co-ownership in the Land Register.

As a result of the loss of control of the developer, we have just held the first meeting of co-owners to replace the director who had been appointed by the developer and elect a new board of directors.  However, this director has not reported on his administration since the publication of the declaration of co-ownership!  Even worse, we don't know what he did with the condo fees he collected. Question: What rights do we have against it?