Law 16 contains the biggest change to condominium law since the Civil Code was introduced. In December 2019, the bill was passed after an extensive study in parliamentary committee that lasted several months.
What are the objectives of this law 16?
The reform contained in Law 16 is so broad that it necessarily has multiple objectives. We believe that the best way to summarize the amendment would be to say that it aims to reaffirm the mission of the syndicate of co-ownership to preserve the immovable by imposing or encouraging measures of good management.
These measures are the result of the sad reality that affects the condominium sector: skyrocketing insurance costs, high claims rates, anemic pension funds, repeated special assessments, lack of maintenance, maintenance work done too late, etc.
What changes does it bring and what are the impacts on the responsibilities of unions or building managers?
The following is a list summarizing the changes made by Law 16 with respect to divided co-ownership:
- The syndicate must have a contingency fund study and a maintenance book in its condominium registry.
- The penalty clause (the one which, for example, allows fines to be imposed on a co-owner who does not respect the rules) must be included in the decree constituting the declaration of co-ownership. Therefore, it will be more difficult to modify (double majority) and, when modified, it must be notarized.
Law 16 implications: Contingency Fund
Perhaps the most important change, in our view, is the requirement to conduct a forecast study every 5 years and to base contributions to the forecast on the recommendations of that study. In other words, the union must have a study of this contingency fund of a member of the professional order every 5 years. This recommendation is not currently in effect. It will come into force when the government adopts a regulation that can define the professionals who can carry out this study and certain study conditions. Once the regulation is adopted, the unions have 3 years to apply it.
Contributions to the contingency fund should be based on the recommendations of the contingency fund study. If the contingency fund study reveals that the contingency fund is inadequate, the board of trustees shall set contributions to ensure that the fund is adequate 10 years after the study is obtained.
A large majority of the syndicates do not contribute sufficiently to their provident fund and, as a result, these condominiums have to resort repeatedly to special contributions and, in general, are less well maintained. This system also puts a strain on those who live in the building as adults, while those who lived in it in their youth and sold it have not paid their fair share for the maintenance of the building.
The union should have a maintenance log in place and review it periodically. This obligation is not currently in force, but will come into effect very soon, when the government adopts a regulation specifying the terms of the maintenance log (implementation, maintenance, revision, etc.). Within 30 days after the constitution of the syndicate at a special meeting, the owner of the building must provide the syndicate with the maintenance booklet, a contingency fund study and other relevant documents. In summary, the responsibilities of unions or building managers have been modified and are better supervised by Bill 16. It will therefore be important to update their procedures to provide for a contingency fund and to follow up with the service log. When it comes to updating the logbook, experts in the field can guide you and offer recommendations based on the conditions of your facility. Don’t hesitate to contact the specialists!
To know more about the maintenance log, take a look to this article: https://rousso.ca/en/the-maintenance-log-for-a-building/