Act 16 – Contingency Fund Study
As of January 2020, the adoption of the omnibus condominium bill stipulates that it will be mandatory for condominium corporations to keep a maintenance log and produce a contingency fund study of their condominium every five years. Although these changes are not yet in effect, they are expected to come into effect in 2022. Therefore, certain terms and conditions will have to be respected once the regulation is established in the Civil Code of Quebec.
What situation applies to your condominium?
- For a condominium established before January 10, 2020, you will have to comply no later than three years after the bylaw comes into force;
- For a condominium established after January 10, 2020, you will need to be in compliance by the time the by-law comes into force, which could be as early as the end of 2022.
A contingency fund study has two essential components: a technical component and a financial component.
|A technical component|
|The technical component requires an expert to identify and evaluate the physical condition and life expectancy of the various building components of the common areas. It is through a visual inspection of the elements constituting the exterior and interior of the building that the professional will be able to produce an accurate report of the condition of the building. It will include an inventory of the following:|
– The building envelope;
– All interior finishes of the common areas;
– Fire safety systems;
– Common mechanical and electrical systems;
– The roof and the parking lot (garage);
– The foundation of the building;
– And all other components that are part of the common areas.
|A financial component|
|The financial component involves an estimation exercise to establish the amounts needed to maintain the assets during any major repairs or replacement of common areas that will have to be paid into the contingency fund.|
The correlation between the life of the elements and their replacement cost plays a major role in this exercise. To obtain even more accurate data, the amounts are also subjected to a simulation of the inflation rate over 25 years, but also to the return on investment in order to arrive at realistic projections.
Our team of specialists can help you better understand the stakes of these new obligations and guide you through the compliance process. Our pension fund studies include the following :
1. A complete building condition report
This report is given to you following the visual inspection of the various targeted components. In conjunction with the review of existing documents, this report allows for a more accurate contingency fund study based on recent observations by one of our professional technologists.
2. A study of contingency funds
The study is delivered in the form of a detailed report, presenting different scenarios of the amounts to be paid into the pension fund, so that you can choose the one that best suits your financial situation. As provided for in Law 16, the annual contribution of the co-owners to the contingency fund should be determined on the basis of the said study.
3. A service and maintenance booklet
The maintenance and upkeep booklet allows you to keep an inventory of all the components of the common areas in order to ensure their preservation. Delivered in paper or virtual format, you will be able to easily find all the components of the common areas and their maintenance instructions.
It is your legal responsibility to entrust your pension fund study to professionals.
Law 16 specifies that only the specialists mentioned below may conduct a pension fund study:
- Professional Technologists
- Certified appraisers
Relevant resources to consult