Implementation of Law 16

On the eve of the implementation of Bill 16 on co-ownership rights, our president, the distinguished lawyer Me Yves Joli-Cœur, spoke with La Presse to explain the impact of this law on Quebec co-owners. Here is a summary of that discussion.

A Law Regulating the Management of Co-ownerships in Quebec

Given the many issues related to the underfunding of co-ownerships in Quebec, this legislative update aims to better regulate the management of condominium buildings and provide buyers with clearer information about the condition of properties.

A Dual Objective

This legislative reform has two main goals:

• Ensure the long-term sustainability of the co-ownership real estate market.
• Allow buyers to better assess financial risks before purchasing a unit.

New Obligations for Condominium Syndicates

Condominium syndicates will now be required to:

• Implement a maintenance log, a technical document listing common areas and planning future maintenance work.
• Commission a contingency fund study to ensure proper financial planning for major repairs.
• Provide a financial status certificate to sellers and potential buyers, detailing available funds and the necessary funds required for future needs.

The Maintenance Log and Contingency Fund Study: Essential Management Tools

The maintenance log plays a crucial role as it lists elements that need maintenance and replacement. Its content directly feeds into the contingency fund study, which determines the necessary contributions to cover future expenses.

Example: If a roof needs to be replaced in 30 years, the study will estimate the required savings starting today to cover future costs, factoring in inflation.

A Necessary Law to Address Underfunded Condominiums

There are numerous stories of owners having to pay tens of thousands of dollars in emergency repairs. Too often, buyers discover after the fact that their building lacks the necessary funds for essential repairs. This law seeks to end such situations by enforcing long-term financial planning.

Market-driven Enforcement

The enforcement of this law will not be directly monitored by a government agency but rather by market forces. A poorly managed building will become uninsurable, unsellable, and ineligible for financing from institutions like Desjardins or the National Bank. As a result, condominiums without adequate contingency funds will gradually lose value.

Implementation Timeline

Syndicates will have three years to conduct their contingency fund study and establish a maintenance log. Once this step is completed, they will have an additional ten years to accumulate the necessary funds. However, delays in implementing this law raise concerns: the longer the obligation is postponed, the more the financial shortfall of condominiums worsens.

Variable Impact Depending on Co-ownership Type

This law primarily affects the 389,000 divided co-ownership units in Quebec. However, the 13,000 undivided co-ownership units are not covered by this reform, creating a legal gap that could pose issues in the long run.

Conclusion

With this new law, condo buyers will not only be purchasing physical spaces but also a predictable management plan for the building’s maintenance and finances. While some condominium syndicates have anticipated these changes, others will need to adapt quickly to ensure the viability of their properties and protect owners from unpleasant surprises.

Read the full article [in French] here.

Learn more with our in-depth report on these legal changes.