We all thought Bill 401 had died on the agenda, but as a phoenix it is rising from its ashes. The Quebec Government has basically kept its main components and drafted a new version, namely Bill 16, which aims, inter alia, to provide divided co ownership with an improved framework by the means of amendments to several articles of the Civil Code of Quebec.

In doing so, the Quebec government is consistent with its election promises. Several leading legal advisers are of the view that the government is thereby showing its concern of the state of repair and condition of immovables held in co-ownership.

Mandatory Contingency Fund Study

One of Bill 16 highlights is the mandatory preparation of a contingency fund study. This means, inter alia, that developers of a newly built co-ownership must, within six months after the special general meeting transferring the administration from the developer to the syndicate, prepare and provide the syndicate with a contingency fund study and a maintenance logbook.

Developers will also have to provide the "significant modifications" made to the original plans and specifications, as well as the private portions description stipulated in section 1070 (of the civil code) , within the period of 30 days following the transitional special general meeting. Take note that they will be held "responsible for the prejudice" resulting from their "failure to provide these documents and information."

What about Existing Co-Ownerships?

As for existing co-ownerships, they will also need to prepare a contingency fund study and a maintenance logbook, which will need to be updated and revised periodically. The latter will have a reasonable period of time to prepare these documents.

Co-ownerships that will have already availed themselves of a logbook, when the new law comes into force, will have a period of time to modify it, if it does not comply with the new rules.

Keep in mind that if the contingency fund study reveals that the contingency fund is insufficiently funded to cover the estimated cost of major repairs, as well as the costs related to the replacement of the common portions at the end of their useful lifespan, a syndicate will have to replenish it over 10 years, following the effective date of the study.

Deposit Protection

A new measure will affect deposits given to a builder or to a developer at the occasion of an “on plan sale”. These deposits shall be protected by one or several of the following means: a guarantee plan, an insurance, a guarantee bond or the deposit of those amounts in a trust account, by a professional designated by government regulation.

The bill also deals with the memorandum (information note) given to buyers by a developer. Those who have not received it, or who have received a memorandum containing errors or deficiencies may, "if they suffer serious prejudice therefrom ", ask for the nullity of the sale and damages. This application must be instituted within 90 days following the transaction. It may also be initiated by the syndicate, at the request of the concerned co-owner.

The creation of a professional corporation to govern co-ownership managers is glaring omission of this bill. At this juncture, those who assume this responsibility are not governed by any professional corporation or bound to any training. There are excellent co-ownership managers who are not members of a professional corporation, but there are more than a few that are incompetent.

To read all of Bill 16, click on this link.

By François G. Cellier for

Montreal, April 3, 2019