Following public consultations held in March, April and May of 2012, at which we filed a written submission and have made representations on 7 November 2012, the Advisory Committee on co-ownership has submitted its report to the Minister of Justice, Mr. Bertrand St-Arnaud, and to the Board of Directors of the Chamber of Notaries of Quebec.
In addition to presenting an overview of the information gathered during these public consultations this report contains recommendations for legislative changes to divided co-ownership in Quebec which will be considered by the Minister of Justice and possibly give rise to legislative changes affecting co-ownership.
In the previous issue we discussed the proposed changes to the majorities required for certain decisions at the assembly of co-owners.
In this issue we will discuss recommendations to make it easier for the buyer of a fraction of co-ownership to obtain the information necessary for an informed purchase.
According to the report of the Advisory Committee on co-ownership it was found by the latter during the public hearings that access to information held by the syndicate for a buyer who performs due diligence is often difficult, and that even the co-owner seller must face the same difficulties. Depending on the current state of the law the registry of co-ownership can be accessed only by one of the co-owners, or by a designated agent, and the prospective buyer can only ask the syndicate if the co-owner seller owes unpaid common charges to the syndicate.
The Committee then took the position that the disclosure of information requested by the buyers would be made mandatory for the syndicate and, if necessary, for the manager, and that brokers, agents, notaries and lawyers should be made aware of the importance of obtaining this information and be encouraged to do so.
Moreover, the Committee recommends that, at the resale of a fraction of a co-ownership, the seller would be obliged to deliver to the prospective buyer at the signing of the bid, an informative document from the syndicate attesting the following elements:
the amount of the common individual charges payable by the co-owner dealer for the current year;
the status of the charges and of the emergency fund;
the fact that no special assessment has been passed;
the planned major works;
a declaration of any judgment or judicial proceedings against the syndicate or the co-owner seller;
the existence of the maintenance log that the prospective buyer may consult if desired;
the certificate of the location of the building;
the list of the common portions reserved for limited use by the co-owner seller;
the insurance policy of the syndicate;
the minutes, budgets and financial statements of the last two years;
a certified copy of the updated regulations applicable at the syndicate.
The Committee recommends that this requirement would be mandatory and that the buyer could not waive it, and that the syndicate would be obliged to provide the recommended document, for a reasonable fee, within fifteen days of the request.
Currently, some forms used by real-estate brokers and agents to meet the requirements of the Organisme d'autoréglementation du courtage immobilier du Québec (OACIQ) (the organization of self-regularization of Quebec Real-Estate Brokerage) aim to collect the same information at the time of the bid, or even before. However, although the use of these forms is required by the OACIQ for its members, there is no obligation for the syndicate or its manager to respond for the time being, except in regard to the amount of unpaid charges by the co-owner seller, if applicable.
Although we are in favour of promoting an informed purchase of a co-ownership we have some misgivings at the level of the binding character of these recommendations which will have the effect of creating a burden of additional work for the Board of Directors who are, do not forget, volunteers. The work to respond to these requests for information on each bid on one of the units in a co-ownership, however, may pose fewer problems for co-ownerships employing the services of a professional manager.
We also have some reservations at the level of the privacy control once the information has been provided to the prospective buyer which, if taken out of context by others, may, wrongly, have a negative impact on the value of the units of the building.
We would like to emphasize to you that all the recommendations of this committee should be studied in detail by the Minister of Justice of Quebec, and, if they are used, they should follow the usual path of any change in law before receiving the final approval of the National Assembly for their entry into force.
We will get back to you in a future article on other recommendations that we consider important for the co-ownership.
In the meantime we invite you to contact our team of lawyers specializing in real-estate law for any question on this topic.