| Written by Me Sébastien Fiset , LL.B., B.A.A. |
| Vendredi, 17 Septembre 2010 17:48 |
DECLARATION OF CO-OWNERSHIP PRIOR TO 1994
Contact the author : s.fiset@fisetlegal.com
– IS IT STILL VALID OR OBSOLETE?
The Declaration of Co-ownership is the source, the reference for co-owners or occupants of an apartment designated as a co-ownership, as far as rules of conduct that are to be respected. It outlines the specific and auxiliary legal facts regarding the rights and obligations of the syndicate, the co-owners, tenants and occupants, as well as the applicable restrictions as defined by the destination and characteristics of the immovable and its fractions (ex: the nature of parking spaces, storage lockers, number of units, distribution of voting rights, etc).
Briefly, the Declaration of Co-ownership is the pillar on which the rights and obligations of the co-owners and the syndicate are built. As a result, it should be as explicit as possible and written with great precision in order to avoid all confusion.
In 1994, an event of great importance took place in the legal world: the reform of the Civil Code of Lower Canada which led to the Civil Code of Québec coming into force. This new code not only transformed the legal foundation of general rights, but also brought about important changes with regards to co-ownerships, one of its most important being the creation of the distinct legal person: the syndicate of co-ownership (functions as a legal person, separate body from its co-owners).
Since this reform, the updating of declarations of co-ownership has become useful, and often necessary.
THE ACTUAL SITUATION
Since the reform, new Declarations of Co-ownership are drawn up in keeping with the instructions contained in the new Civil Code of Québec
So where does that leave the Declarations of Co-ownership which were drawn up prior to the implementation of the new Civil Code of Québec (under the Civil Code of Lower Canada), where some of their clauses differ or are considered void under the terms of the new code?
One often witnesses, at general meetings of co-owners, futile debates attempting to interpret certain provisions outlined in the terms of the Declarations of Co-ownership published under the Civil Code of Lower Canada (prior to 1994). In addition, certain stipulations are written in a language which leaves many perplexed when it comes to interpretation of the provisions of the new Civil Code of Québec. Unfortunately several legal proceedings were initiated, and continue to be today, from such conflicts of interpretation.
When stipulations between the Civil Code of Québec and a Declaration of Co-ownership published prior to 1994 are in conflict, it is not an easy choice for a co-owner or an administrator to know which of the two regulations should prevail according to the law.
Furthermore, the legislator anticipated certain transitional provisions in the application of the Civil Code of Québec of 1994[1] :
« 52. In matters concerning divided co-ownership of an immovable, a group of coproprietors becomes a syndicate. The rights and obligations of the administrators of the co-ownership are transferred to the syndicate.
The administrators of the co-ownership become the directors of the syndicate and constitute the board of directors thereof, except where there is cause for disqualification.
The syndicate is designated by the name which the co-owners as a body have given themselves or by which they are generally known, or by the address of the place where the immovable is located. »
« 53. Divided co-ownership of an immovable established before 1 January 1994 is governed by the new legislation.
« 54. The clauses contained in existing declarations of co-ownership are placed in one of the categories contemplated in article 1052 of the new Code, in accordance with the provisions of articles 1053 to 1055 of that Code. »
« 55. Article 1057 of the new Code is applicable to a lessee under a lease in effect on 1 January 1994. »
« 56. Article 1058 of the new Code does not apply to divided co-ownership of immovables existing on 1 January 1994 and in which several persons have a periodic and successive right of enjoyment in the same fraction.
However, as long as the act constituting the co-ownership has not been amended pursuant to article 1058, the alienation of any right in such a fraction, or in any other fraction of the same immovable, is subordinate, on pain of nullity, to the fulfillment of the conditions relating to the sale of residential immovables provided in the new Code. »
« 57. The failure to act with diligence referred to in the second paragraph of article 1081 of the new Code is appraised in accordance with the former legislation if the latent defect was discovered before 1 January 1994.»
« 58. In divided co-ownerships which exist on 1 January 1994, the periods provided for in articles 1104 and 1107 of the new Code run from 1 January 1994.»
The stipulation in the Declaration of Co-ownership which states that unanimous agreement for decisions regarding making a change to the destination of immovable is however maintained, despite article 1101 of the new code.
Also maintained, despite article 1064 of the new code, is the stipulation in the Declaration of Co-ownership which fixes the contribution of charges resulting from the co-ownership and the operation of the building according to the dimensions of the private portion of each fraction.
HOW DO THESE CHANGES EFFECT DECLARATIONS OF CO-OWNERSHIP PUBLISHED PRIOR TO 1994?
As mentioned above in the terms of article 58 of the Act Respecting the Implementation of the Reform of the Civil Code, two (2) stipulations must remain:
- The rule relating to obtaining unanimous agreement within the framework of any decisions which affect the destination of the immovable ;
- The stipulation of the Declaration of Co-ownership which fixes the contribution of common expenses according to the dimensions of each fraction.
As far as the remaining statements contained in Declarations of Co-ownership prior to 1994, many changes need to be made so that they can conform to the new law.
Let’s look at some of the major provisions outlined in the new Civil Code of Québec:
- Reconstruction of a building following a disaster:
Prior to 1994: many Declarations of Co-ownership necessitate a decision by the co-owners as to whether or not to rebuild.
Presently, according to the terms of article 1075 C.c.Q.:
« The indemnity owing to the syndicate following a substantial loss is, notwithstanding article 2494, paid to the trustee appointed in the constituting act of co-ownership or, where none has been appointed, designated by the syndicate.
The indemnity shall be used to repair or rebuild the immovable, unless the syndicate decides to terminate the co-ownership, in which case the trustee, after determining the share of the indemnity of each of the co-owners according to the relative value of his fraction, pays the preferred and hypothecary creditors out of that share according to the rules in article 2497. For each of the co-owners, he remits the balance of the indemnity to the liquidator of the syndicate with his report. »
[Bold added]
- Termination of a co-ownership:
While it was generally understood according to the terms of the Declarations of Co-ownership prior to 1994 that unanimous agreement was required to terminate a co-ownership, article 1108 C.c.Q. decrees the following:
« Co-ownership of an immovable may be terminated by a decision of a majority of 3/4 of the co-owners representing 90% of the voting rights of all the co-owners.
The decision to terminate the co-ownership shall be recorded in writing and signed by the syndicate and the persons holding hypothecs on the immovable or part thereof. This decision is entered in the land register under the registration numbers of the common portions and private portions. »
- Assembly of co-owners:
Major changes were implemented with regard to the majority requirements for certain decisions made during assemblies of co-owners.
In fact, according to the terms of articles 1096 to 1102 of the Civil Code of Québec which are of public order and therefore requirements of the law since 1994 (article 1101. C.c.Q.):
Article 1096 C.c.Q.:
“Decisions of the syndicate, including a decision to correct a clerical error in the declaration of co-ownership, are taken by a majority of the co-owners present or represented at the meeting.»
Article 1097 C.c.Q.:
«Decisions respecting the following matters require a majority vote of the co-owners representing 3/4 of the voting rights of all the co-owners:
1° acts of acquisition or alienation of immovables by the syndicate;
2° work for the alteration, enlargement or improvement of the common portions, and the apportionment of its cost;
3° the construction of buildings for the creation of new fractions;
4° the amendment of the constituting act of co-ownership or of the description of the fractions.»
Article 1098 C.c.Q.:
«Decisions on the following matters require a majority vote of 3/4 of the co-owners representing 90% of the voting rights of all the co-owners:
1° to change the destination of the immovable;
2° to authorize the alienation of common portions the retention of which is necessary to the destination of the immovable;
3° to amend the declaration of co-ownership in order to permit the holding of a fraction by several persons having a right of periodical and successive enjoyment.
Article 1099 C.c.Q.:
«Where the number of votes available to a co-owner or a promoter is reduced by the effect of this section, the total number of votes that may be cast by all the co-owners to decide a question requiring a majority in number and votes is reduced by the same number. »
Article 1100 C.c.Q.:
«The co-owners of contiguous private portions may alter the boundaries between their private portions without obtaining the approval of the general meeting provided they obtain the consent of their hypothecary creditors and of the syndicate. No alteration may increase or decrease the relative value of the group of private portions altered or the total of the voting rights attached to them.
The syndicate amends the declaration of co-ownership and the cadastral plan at the expense of the co-owners contemplated in the first paragraph; the act of amendment shall be accompanied with the consent of the creditors, the co-owners and the syndicate. »
Article 1101 C.c.Q.:
“Any stipulation of the declaration of co-ownership which changes the number of votes required in this chapter for taking any decision is deemed unwritten. »
Article 1102 C.c.Q.:
«Any decision of the syndicate which, contrary to the declaration of co-ownership, imposes on a co-owner a change in the relative value of his fraction, a change of destination of his private portion or a change in the use he may make of it is without effect.»
- Contingency Fund:
The Civil Code of Québec imposes that a minimum of 5% of the contribution of common expenses be paid into the contingency fund according to the terms of article 1072 C.c.Q. Beware! If an additional amount is immediately required to ensure adequate major repairs or replacement of common portions according to the actuarial data in the possession of the syndicate, it is this sum which would prevail, not the 5%. To our opinion, no limit, in either dollars or percentage less than this 5% (or supplementary sums required) can be stipulated in the Declaration of Co-ownership.
- Insurance:
Since 1994, all Syndicates of Co-ownership must take out insurance to cover the entire immovable against ordinary risks such as a fire. It must cover the common portions as well as the private portions, except for improvements made by a co-owner to his portion.
Article 1073 C.c.Q. stipulates:
“ The syndicate has an insurable interest in the whole immovable, including the private portions. It shall take out insurance against ordinary risks, such as fire and theft, on the whole of the immovable, except improvements made by a co-owner to his part. The amount insured is equal to the replacement cost of the immovable.
The syndicate shall also take out third person liability insurance. »
The importance of updating your Declaration of Co-ownership must not be under estimated. In fact, since the new Civil Code of Québec has come into effect, the courts have rendered decisions in which they take to task boards of directors who have neglected to conform to the new provisions, judging in good faith that the stipulations of Declarations of Co-ownership prior to 1994 should be substituted by the provisions of the new Civil Code of Québec which are of public order (they are not all, be careful!).
UPDATING DECLARATIONS OF CO-OWNERSHIP:
In order to determine what remains valid and what should be changed in your Declaration of Co-ownership, the assistance of a professional who has a practice specializing in co-ownership law is recommended.
Following are the broad steps in rewriting a Declaration of Co-ownership:
- The compilation by the syndicate of all the regulations adopted since the initial publication of the Declaration of Co-ownership; [2]
- Remittance of these to your legal council (lawyer or notary) who will proceed with the update and writing of the act of modification and the inclusion of the new regulations of the immovable to the Declaration of Co-ownership, under the supervision of the Board of Directors of the syndicate;
- Submission of the project to the assembly of co-owners;
- Acceptance of the Act of Modification of the Declaration of Co-ownership by a notary to be minuted and signed by the Board of Directors of the syndicate before publication
- Publication of the Declaration of Co-ownership to the Land Register of Québec;
- Distribution of a copy of the new Declaration of Co-ownership to all the co-owners, tenants and occupants.
To avoid confusion and to avoid unnecessary arguments regarding the legal regulations which are now applicable to all co-owners, it is strongly recommended to proceed with the updating or the rewriting of your Declaration of Co-ownership if it was issued before the reform of the Civil Code of Québec.
As the saying goes: « An ounce of prevention is worth a pound of cure ».
The information provided on this page is general in nature and cannot compensate for the need to obtain legal advice specific to a particular situation.
[1] An Act Respecting the Implementation of the Reform of the Civil Code L.Q. 1992, c. 53
[2] Use the opportunity to update your Declaration of Co-ownership by adding regulations and provisions (according to the conditions required by the terms of the Civil Code civil of Québec) with regard to, for example, the collection of outstanding condominium fees and increases in interest rates, sanctions and penalty clauses (see our text entitled : « MODIFICATIONS AND ADDITIONS TO YOUR DECLARATION OF CO-OWNERSHIP »)
Mise à jour le Samedi, 16 Août 2014 17:22