You have chosen to sell your condo and you managed to find a buyer. However, like any discerning buyer, he would want to know more about the co-ownership in which your condo is located. What are the documents and other information one might ask you in the months and weeks prior to the signing of the deed?
Firstly, it is important to note that under Section 1069 of the Civil Code of Quebec, the person who proposes to acquire your condo unit may request from the Syndicate of the co-owners an overview of the common charges due and unpaid in connection with your unit. The law allows the prospective buyer to obtain this information since this Section holds him responsible for payment of all charges unpaid by the seller at the time of the sale. Of course, the buyer would not want having to pay these charges to the Syndicate, therefore the law allows him to know in advance the amount of the unpaid charges.
Under normal circumstances it is the notary taking care of the sale’s transaction who will take this into account in the distribution of the sums of money due under the transaction, and it is the notary who will retain these amounts from the proceeds of the sale and who will forward them to the Syndicate in the days following the signing and publication of the act.
In most cases it is the notary carrying out the transaction who will address this request for information to the Syndicate on behalf of the buyer in the days before the sale. The Syndicate has a time period of fifteen days from reception of the request for further action in providing information about the state of the charges. If the Syndicate (or sometimes its manager) does not respond in time, the buyer can not be held responsible for payment of these outstanding amounts.
It should be noted that, although the prospective buyer can make such a request for information to the Syndicate, this is exceptional and does not allow him to ask the Syndicate to consult or obtain copies of various documents for which the law requires conservation by the Syndicate in its register under Section 1070 of the Civil Code of Quebec. It must be reminded that the registry of co-ownership is kept at the disposal of the co-owners by the Syndicate, and that the prospective buyer, who is not a co-owner in title, may not require the Syndicate to consult.
Since 2012 real-estate brokers use a form entitled “Request for information to the Syndicate of co-owners.” This document, of which the form is prescribed by the Organisme d’auto-règlementation du courtage immobilier du Québec (OACIQ), allows the co-owner seller to ask the Syndicate of co-owners to answer certain questions about the building and its administration, and authorizes him to disclose such information to a real-estate broker with whom the co-owner has signed a real-estate brokerage contract for the sale of his condominium.
The use of this form is recommended by the OACIQ to its members when they accept a brokerage mandate from a co-owner who wishes to sell his condominium. It should be noted that this form, which includes the majority of questions usually addressed to the Syndicate of co-ownership by the notary who takes care of the sale in the weeks before the transaction is meant to be presented to the Syndicate for response following the signing of the brokerage contract. In principle, the purpose aimed at by this form is to enable the real-estate broker of the seller to have on hand relevant information and specific documents, even before the co-owner seller has received an offer to purchase.
The use by the real-estate broker of the form of a promise to purchase aimed at a co-ownership prescribed by the OACIQ is mandatory and contains a clause by which the promise to purchase is conditional upon what the proposer may consider and declare himself satisfied with the documents provided by the seller, including the form of information mentioned above.
In addition to the information that will be requested from the Syndicate of co-owners we recommend the co-owner to have in his possession the following documents of which he will be able to give a copy to the one from whom he receives a promise to purchase:
- his latest notice of assessment of condominium fees, as well as that of any special assessment currently in force;
- the latest financial statement sent to the co- owners;
- the copy of the insurance policy of the Syndicate (or the certificate of coverage if he does not have a copy of the full policy);
- a copy of the declaration of co-ownership and the house rules and their amendments.
It is recommended that the Syndicate of co-ownership prepares itself to provide information, inter alia, on the following topics and questions:
- The current amount of monthly condo fees and the last payment made by the seller, and if there are any unpaid charges.
- The amount of any assessment adopted, or planned by the Syndicate and the payment date thereof.
- The amount accumulated in the emergency fund.
- Does the Syndicate expect an operating deficit or a surplus for the current year?
- Is the Syndicate aware of a procedure, an arbitration or a subpoena against it or against a third party or a co-owner?
- Does the Syndicate have any knowledge of a judgment against it that would be in the process of being carried out?
- Is the Syndicate registered in the Business Registry?
- Does the Syndicate have a comprehensive insurance coverage?
It is important to understand that the responses provided and the portrait of the situation of the Syndicate may change between the time that this information is submitted and the possible date of any offer to purchase or sales transaction. A re-verification may therefore be called for, and the notary taking care of it all will usually address the same issues in the form of a written request to the Syndicate in the weeks before the signing of the sale.
A good recordkeeping of the financial files and of the registry of the Syndicate will greatly help the Syndicate in being able to respond effectively and timely to the questions asked in this form and prepare itself to respond to requests for information that the notary responsible for the transaction sale could address.
For any questions about real-estate, rental and co-ownership law, do not hesitate to contact our team of specialist lawyers in this field.