In the past 45 years, the lifestyle of condo or divided co-ownership as it is known in Quebec, has become a very popular manner of purchasing property whether for residential or commercial use.
In divided co-ownership, an immovable (your unit) is divided between your own exclusive or private portion and a share of the common (undivided) portions e.g. corridors, elevators, swimming pool, which are in principal shared by all the co-owners. Undivided co-ownership is a concept that will be discussed in a future article.
OBLIGATIONS OF THE CO-OWNERS:
The key document that governs all the co-owners and that should be read in advance of finalizing the promise to purchase (a condition precedent before going to the notary) is the Declaration of Co-ownership. In it, you will find out what your obligations and duties are towards the other co-owners, what you can do, and cannot do and how you may go about making possible changes. In other words, it contains the rules that must be respected in order to properly manage the whole i.e. the ensemble of co-owners or syndicate.
There are 3 parts to a Declaration of Co-ownership: Constituting Act of Co-ownership, By-laws of the property and Description of the fractions.
WHAT IS A DECLARATION OF CO-OWNERSHIP?:
Each syndicate has its own distinctive Declaration of Co-ownership that must be registered in the land registry where the property is situated in order to have a “condo”; this is done by a notary and although there are numerous clauses that are similar, no two are identical. Hence, there is no boiler plate “declaration” where you can find out what your rights are. Each one must be read in its entirety as they are drafted to suit the situation of the condominium. Indeed, there may be a number of syndicates at the same location with distinct Declarations of Co-ownership.
CONSTITUTING ACT:
The Constituting Act establishes the purpose of the condo i.e. commercial, residential, mixed, industrial and its private and common parts. This is important in establishing who is responsible for such obligations as maintenance, insurance, repairs etc. In this part you will find the enumeration of common parts with a restrictive usage which are spaces specifically reserved for the co-owner or of a few co-owners such as an elevator serving not all the co-owners but a few of them.
Another key concept is the relative value of each fraction that will determine the number of votes which a co-owner has vis-à-vis voting at the general assemblies of all the co-owners and making minor and/or significant changes to the Declaration of Co-ownership that inevitably affect all or some of the other co-owners. Among the decisions made are the condo fees paid for each private or exclusive portion. Non-respect of these agreements and the by-laws will often result in penalties.
In order to amend the Constituting Act, a majority vote of the co-owners is required, representing three-quarters of the votes of all the co-owners. Once decided, these changes must be notarized.
THE BY-LAWS:
The By-Laws are usually the second part of the Declaration of Co-ownership and contain the rules for the administration of the Syndicate. The By-Laws deal with the use, enjoyment and maintenance of the exclusive and common portions. Examples are parking, balconies as well as permissible renovations within your own unit. This must be read carefully before embarking on expensive renovations.
In a recent case, a co-owner sharing the premises with one other co-owner, wishes to do renovations to his exclusive portion. The two parties are in disagreement and this with regard to the interpretation of the Declaration of co-ownership. In order to ascertain the rights and obligations of the parties, it was necessary to hire legal counsel to look at all three (3) sections of the Declaration. Should the parties continue to disagree on their respective interpretation, the matter will be brought before the Court, which is both time consuming and costly.
The By-Laws also contain the rules with respect to the functioning and administration of the co-property. They detail how elections take place, the composition of the board of directors and how often they meet, as well as when general meetings of the co-owners are convened and how they are run. In addition, there are the By-Laws concerning the payment of condo fees and the procedures in order to recover amounts owing in case of default.
In order to amend the By-Laws, a decision can be taken by the majority of co-owners present or represented at a meeting. Once decided, these changes must be notarized.
DESCRIPTION OF FRACTIONS:
The description of fractions is the third and final part of the Declaration of Co-ownership which is highly technical in nature. It provides for the legal existence of the Syndicate i.e. the designation of the exclusive and common parts by their cadastre number. It is here that you will find the existence of servitudes, or other real rights registered against the property e.g. rights of passage given to have access to services. In order to amend the description of fractions, a majority vote of the co-owners is required, representing three-quarters of the votes of all the co-owners. Once decided, these changes must be notarized.
CONCLUSION:
When purchasing a condo (divided co-ownership) whether acting for yourself or using a real estate broker, make sure that you have read the governing document, the Declaration of Co-ownership. If you have questions on certain potential situations, a lawyer or notary should be consulted for the legal interpretation of the Declaration of Co-ownership which outlines the duties and obligations of the individual co-owner.
The Declarations of Co-ownership granted before 1994 do not have the same standing as today. There can be clauses that due to the change of law are no longer valid. Hence, a review by a legal professional will help to avoid any conflict of interpretation.
As Benjamin Franklin stated ,“An ounce of prevention is worth a pound of cure.”