Le 995 Muir.com
Saint-Laurent, Québec

 

THE CONTINGENCY FUND

(CondoLegal.com)


 

Since the coming into force of the Civil Code of Quebec, the Syndicate has to establish a contingency fund, that is a fund allocated exclusively to major repairs and replacement of common portions, as opposed to their regular maintenance. Although most declarations of co-ownership already provided for such fund, it is now compulsory by law and certain terms and conditions will have to be followed.

 

Constitution of the contingency fund

Each year, the Board of directors, after consultation with the general meeting of the co-owners, fixes their contribution for common expenses and for the contingency fund. As to the powers of the co-owners in this respect, see our pamphlet entitled: "Common Expenses".

 

The Syndicate may also take into account, in fixing the contribution to such contingency fund, the rights of any co-owner in the common portions for restricted use. Certain declarations of co-ownership used to provide for the establishment of more than one contingency fund, for specific major repairs, by way of example for a category of immoveables. Such practice is no longer allowed, since by law, only one fund is permitted.

 

The contribution of each co-owner is at least five percent (5%) of his contribution for common expenses. There is no limit to the amount of money that may be accumulated in such fund(s).

 

The contribution may be based on the "certificate of status of co-ownership", ideally prepared by an engineer or an architect or any other building expert.

 

Although such document is not a legal requirement in co-ownerships, it provides a detailed evaluation of the immoveable, recommendations with respect to maintenance procedures and guidelines on modes of preservation and an approximate time frame within which replacement or renovation of certain parts of the building will have to take place, as the case may be.

 

Features of the contingency fund

A judgment rendered against the Syndicate of the co-ownership may not be executed against the contingency fund, save and except if the condemnation relates to work provided for by the fund; the Syndicate is the owner of the fund and the monies shall be deposited in a financial institution. The funds shall be liquid and available on a short term basis, i.e.: available to the Syndicate upon notice not exceeding thirty days.

 

The Syndicate has to ensure that the contingency fund accumulates each month and each year, and that it is allocated exclusively to major repairs and replacement of the common portions and not for their day-today maintenance or management.

 

What happens if a co-owner fails to pay his contribution to the contingency fund?

As in the case of failure to pay common expenses, the Syndicate may sue in the Small Claims Court or register a legal hypothec against the fraction of the delinquent co-owner. See our pamphlet entitled: COMMON EXPENSES.

 

Moreover, a co-owner who has not paid his contribution to the contingency fund for more than three (3) months, irrespective of the fact that he may have paid his share of common expenses, shall be deprived of his voting rights at the meeting.