Bill 16 requirement for a contingency fund study for co-ownerships.
Category Miscellaneous
6 March 2023,
Bill 16 requirement for a contingency fund study for co-ownerships.

Most condo buildings in the province are classified as divided co-ownerships, meaning, the building has private dwellings and common areas that are shared. 

The Quebec government passed Bill 16 in December of 2019 which provided new rules that must be implemented by all co-ownerships in Quebec.  This new law provides a stricter and more efficient framework for the management of condominiums in the province.

Previously, each syndicate can manage its building as it sees fit. With Bill 16, standards for uniformity in the management of a co-ownership has been established.

The starting point of Law 16 is the study of the contingency funds. If you are involved in the administration of a condominium, you would certainly know of it.

Condominiums to have a contingency fund study every 5 years

Contingency fund study to plan for maintenance and repairs.

Starting in 2023, condominiums will have to comply with Bill 16 and have a contingency fund study done for their building every 5 years.

The objective of this study is to allow the creation of a financing plan so that the syndicate has the necessary funds in the short, medium, and long term to cover the maintenance, repairs, and replacement costs of the common components of the building.

The bill requires that the fund must be liquid in part and be immediately available if an emergency arises. The capital must also be guaranteed.

This study must be carried out by a professional who is a member of a professional order recognized by the Quebec government.

The contingency fund study must be carried out every 5 years, and will, therefore, be an-ongoing process.

Here are the main requirements of Bill 16 which concern co-ownerships:

What does a condominium contingency fund study include?

Planning costs for future repairs for condo buildings.

A contingency fund study is a global approach that essentially aims to ensure the proper maintenance of a building in the short, medium, and long term.

This study aims to offer recommendations concerning the amounts of money that the syndicate must collect through the condominium fees as well as maximize the useful life of the common components of the building.

But what exactly does a contingency fund study include in Quebec? First of all, it is important to understand that the professionals who carry out the study must obtain a contingency fund study accreditation from the RGCQ (Regroupement des gestionnaires de copropriété du Québec).

Step # 1: Inventory and quantification of the building's components

The first step of the contingency fund study is to make an inventory of all the common components of the building. The inspector must also quantify them.

The inventory will list each component, its materials, the quantity in the building, its location, and the exact dimensions.

Below is a list of common components for a condominium building:

At this stage, the professional will also collect all documents used by the union in its current management, for instance, budgets, financial statements, etc.

The inspector will also need to have access to building plans, specifications, and all other essential documents. It is the responsibility of the union to provide the necessary documentation.

Step #2: Inspection and evaluation of the condition of the common portions

Once the inspector has made an inventory of all the common areas that are under the responsibility of the syndicate of co-ownership, he will have to evaluate their condition.

The professional will make an on-site visit to visually inspect the accessible elements of the common areas of the building. This inspection is extremely important because it allows him to determine accurately the remaining life expectancy of the components targeted by the study.

If certain components are not accessible, the inspector will refer to the technical plans and specifications available.

Visual Inspection

The inspection performed is visual only. No destructive methods are used, including the opening of walls or any other operation that could damage the building.

RGCQ Standards

Certified inspectors must comply with RGCQ standards when assessing the condition and remaining life of existing condominium components.

Step 3: The building condition report

Once the inspection of the common areas is completed, the inspector will prepare and produce what is called a building condition report.

This report, also known as a building condition certificate, is based on the results of the inspection and is a snapshot of the current physical condition of the building.

This report will disclose the current condition of the various components of the building, and the recommendations of the professional as to whether a more thorough inspection of certain elements should be done.

Below are the contents of a building condition certificate:

The last section of the report will be divided into different categories. The following is an overview of what may be included in the report:

Step 4: Evaluation of replacement costs and major repairs

Following the delivery of the building condition certificate, the inspector must conduct the evaluation of:

This analysis will be used to establish how often each component must be replaced, and how much it will cost to do the work.

This analysis of future replacement and repair costs will then form the basis of the financing plan.

At the end of this assessment, you will know how much money will be needed annually to replace each component of the building when the time comes. The estimated costs are based on standard construction industry grids.

25-Year Economic Projection

Replacement cost planning is presented over a 25-year horizon, but may consider a total of 60 years to account for the full life cycle of some components. This projection should be updated every 5 years.

Step 5: Establishing contingency fund financing plans

Once the replacement costs have been estimated, the inspector must then turn to the most important step-the establishment of a financing plan for the condominium.

The analysis may show that the condominium is not currently raising enough money annually to cover future building expenses.

The financing plan will then ensure that the condominium will have contributed enough to the contingency fund to cover the maintenance, repairs, and replacement of each component.

The financing plan may determine that you currently have a surplus, a balanced position, or a deficit. If you are in a deficit, these are the two possible strategies.

Option #1

An adjustment of the condominium fees will be made over a period of 1 year. This implies that the co-owners must increase their dues now, which can be a significant increase that can put financial stress on the co-owners. This scenario meets the requirements of the Act regarding contingency fund studies.

Option #2

An adjustment of the condominium fees will be made over a period of 10 years. This implies that the deficit will be spread over a longer period of time which will make the transition smoother for the condominium budget. However, it should be understood that during the transition period, special assessments may be made if replacement expenditures are required. This scenario also meets the requirements of the Act for contingency fund studies.

Step 6: The 5-year review of the contingency fund study

Once the union has selected the funding plan that best meets its expectations, it will receive a study report that includes the following sections, among others.

Once the study is completed, the syndicate must then follow the recommendations of the professional. To ensure that the syndicate respects everything, Bill 16 provides that this study must be repeated every 5 years.

This obligation aims to prevent the premature deterioration of the components and protect the co-owners against a possible special assessment.

Step 7: Setting up the maintenance booklet and calendar

Finally, the inspector will also have to put in place two important elements during the study of the contingency fund, namely

What are these elements which are now mandatory for all condominiums in Quebec?

The maintenance booklet is a kind of register that traces the history of all the operations done or to be done on a building. It lists all the maintenance contracts granted, the maintenance contracts, and the guarantees offered by the subcontractors.

The maintenance calendar is used to plan the dates when the maintenance of each common component of the building is scheduled. This increases the efficiency of the building’s maintenance and maximizes the life of the components. Building managers will be able to use the maintenance log and schedule to optimize the maintenance and long term life of the various components of their building. This schedule generally takes the form of a table presenting the tasks to be accomplished for the next 5 years.

Fee schedule - Quebec contingency fund study

How much does a contingency fund study under Bill 16 on condominiums in Quebec cost?

It all depends on the building. The fees vary from one condominium to another based on the number of units and other variables specific to each case. 

You will find below the fee schedule for the approximate fees for the following:

Together, these three elements make up a complete contingency fund study. For a free personalized quote, fill out the form on this page or click on the button below.

Condominiums with 2 to 4 units

Building certificate: $500

Maintenance booklet: $900

Contingency Fund: $1,250

Condominiums with 5 to 10 units

Building certificate: $750

Maintenance booklet: $900

Contingency fund: $1,250

Condominiums with 11 to 20 units

Building certificate: $1000

Maintenance booklet: $900

Contingency fund: $1250

Condominium of 21 units or more

Building certificate: $1000 + $50 each unit

Maintenance booklet: $900

Contingency fund: $1250

Horizontal co-ownership  

(Price for 1 building)

+$250/extra building

Building certificate: $250

Maintenance booklet: $900

Contingency fund: $1250

Get a quote for a contingency fund study in 2 minutes!

Do you need help with your condominium to comply with Bill 16 requirements? You will need a certified building professional who meets the standards for a contingency fund study. 

At Compare Home Quotes, we have partnered with qualified professionals specializing in Bill 16 compliance who can be of assistance to you. 

Fill out the online form on this page or click on the button below to obtain a quote for a contingency fund study, free of charge!

At the same time, you will be able to ask all your questions to find out how to optimize the management of your co-ownership under the new rules.

Send your request now, with no obligation or charge, so you can stop worrying about the requirements of Bill 16.

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