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Co-ownership Contingency Fund: Everything you need to know

Condominium living is often associated with benefits such as security, cost sharing and access to shared amenities. However, it also comes with financial responsibilities. One of them is the contingency fund.


But what exactly is it?

And why is it so important?

What is the provident fund?

Since 1994, the Civil Code of Quebec has required co-ownership syndicates to set up a contingency fund. This fund is intended to cover the costs of major repairs and replacement of common areas of the building. In other words, it’s a sort of “potential pot” for the big jobs to come.

Why is it necessary?

Imagine your building's roof needs replacing or the plumbing system is faulty. These repairs can be expensive. The contingency fund guarantees that money will be available when these major works are necessary.

How is it financed?

The Civil Code of Quebec stipulates that at least 5% of common charges must be paid into this fund. However, this amount is often considered insufficient. Hence the importance of carrying out a contingency fund study to determine the exact amount to pay.

How does the contingency fund study work?

The study, like that carried out by Vicat consultants, follows a precise methodology:

Inventory of building elements (e.g. plumbing, electricity).

  • Analysis of the condition and replacement costs of each element.

  • Estimated reserves required for future work.

  • Analysis of current fund balance.

  • Proposal of financing models to achieve the objectives.

What’s new with Law 16?

Adopted in 2019 and implemented in 2022, Law 16 strengthens the obligations of co-ownership associations. They must now keep a building maintenance log and carry out a study of the contingency fund.

Why is this so important for co-owners?

The study of the contingency fund makes it possible to determine the sums necessary for future work. It also helps to set the monthly contribution of the co-owners. The goal is to avoid unpleasant financial surprises in the future.

When to use this fund?

It is intended for major repairs to common areas. Before using it, it is essential to consult the declaration of co-ownership to find out the precise terms and conditions.

In conclusion, the contingency fund is an essential tool to guarantee the sustainability and good maintenance of co-ownership buildings. It protects co-owners against possible unforeseen expenses and guarantees that the building remains in good condition for future generations.

If you have any questions or would like to know more, please do not hesitate to contact us for a quote.

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