Common expenses: allocation and collection

Administrative, maintenance, replacement, improvement or alteration expenses of the common portions are divided among the co-owners. General common expenses are to be distinguished from particular common expenses, which are allocated under different rules. In the first case, it is the relative value of each fraction that is used to establish the co-owners contribution. As for special common expenses arising from common portions for restricted use, the co-owners using them are alone responsible of the expenses resulting therefrom.


Calculation of the allocation of expenses between co-owners

 A) General common expenses

The general common expenses are for the preservation, the maintenance and the administration of the common portions. They are allocated in accordance with the relative value of the fraction of a co-owner.

In this respect, Article 1064 of the Civil Code of Québec provides that:

    "Each co-owner contributes in proportion to the relative value of his fraction to the expenses arising from the co-ownership and from the operation of the immovable, and the contingency fund established pursuant to article 1071. ".

This method of allocation is the rule in the majority of declarations of co-ownership, because the legal provision which prescribes it is of public order of protection.

B) Special common expenses

The rules applicable to the allocation of maintenance and repair costs for common portions for restricted use are different. Article 1064 of the  Civil Code of Quebec prescribes that the co-owners who have the use of common portions for restricted use contribute to the expenses related to the maintenance and the ordinary repairs of those portions. Unlike the general common charges, these particular common charges concern only certain co-owners and are aimed at very specific expenses.

C) Common expenses relating to the contingency fund

The co-owners contributions to the contingency fund are used to pay for major repairs and the replacement of common portion, whether for restricted use or not. The method of allocation is the same as that for general common expenses, which is to say according to the relative value of each fraction.

However, article 1064 of the Civil Code of Quebec modulates this rule. It states that in order to establish the co-owners' contribution to the contingency fund, the respective co-owners rights to the common portions for restricted use may be taken into account. For example, the declaration of co-ownership could include a provision allowing the allocation, to a co-owner, of the costs associated with the replacement of a terrace for which he has the exclusive use.

D) Self-insurance fund common expenses

The law (article 1071.1 of the Civil Code of Quebec) will compel, on April 15, 2022, any syndicate of co-owners to set up a liquid and available at short notice self-Insurance fund. The obligation to set up such a fund is already an existing practice in several co-ownerships. The amounts deposited therein belong to the syndicate and are not refundable to the co-owners selling their private portion. This self-insurance fund is firstly intended for the payment of the deductibles in the insurance policies taken out by the syndicate. It is also allocated to indemnify the damages caused to property in which the syndicate has an insurable interest, when the contingency fund or an insurance indemnity cannot cover. This fund is established by taking into account the deductibles and a reasonable additional amount to cover other foreseeable payments. Finally, it should be noted that the government will determine by regulation how to establish the minimum co-owners' contributions to this fund.

Furthermore, Article 1064 of the Civil Code of Québec was amended in 2018 following the amendments made to the latter by Bill 141, in keeping with the introduction of the obligation for syndicates of co-ownership to establish a self-insurance fund, provided for in the recently adopted article 1071.1 of the Civil Code of Québec,. It is thus stipulated that each co-owner contributes, in proportion to the relative value of his fraction, to the self-insurance fund, constituted pursuant to Articles 1071 and 1071.1. respectively.

Common expenses payment and recovery

In order for the syndicate to carry out its mission and have the necessary funds to cover its current expenses, the budget forecast must be submitted to the co-owners for consultation at a general meeting. The directors then adopt it (by a majority vote) at a meeting of the board of directors. A written resolution signed by all directors is equally valid. Thereafter, the board of directors informs (without delay) each co-owner of the amount to be paid, as well as the date on which the payment is due. This is done by the mean of a notice of assessment.

 WHAT YOU SHOULD KNOW! The relative value is shown in the constituting act of the co-ownership (first portion of the declaration of co-ownership). It is used to establish the share of the right of ownership (of the co-owners) in the common portions, their contribution to common expenses and the number of votes attached to their private portion.

 WHAT YOU SHOULD KEEP IN MIND: The establishment of the budget forecast and the recovery of common expenses are the responsibility of the Board of Directors, which manages the co-ownership’s funds.

 WARNING! The co-owners must contribute to the contingency fund in accordance with the relative value of their fraction. However, a clause in the declaration of co-ownership could provide that a co-owner who has the exclusive use of a common portion for restricted contributes alone to the cost of major repairs or replacement work resulting therefrom.


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