Article 1071 C.C.Q. - What every condominium owner should know before buying a condo unit.
Are you a condominium owner in Quebec? You've probably heard of the contingency fund. But do you really know what it is and why it directly concerns you?
WHAT IS THE CONTINGENCY FUND?
The contingency fund is a financial reserve built up by the co-ownership syndicate to finance major repairs and the replacement of common portions of a divided co-ownership building — roof, elevators, windows, parking areas, plumbing systems, and so on.
In short: it is the building's collective savings account to avoid unpleasant surprises.
LEGAL BASIS
In Quebec, article 1071 of the Civil Code of Quebec establishes the strict obligation for the syndicate to constitute a contingency fund. Since the adoption of the Regulation establishing various rules respecting divided co-ownership that came into force in 2025, this obligation has been considerably reinforced by the requirement to obtain a technical and financial study every 5 years.
Under the law, the contingency fund is dedicated exclusively to major repairs and replacements of common portions. It cannot be used for current operating expenses such as cleaning, concierge services, or snow removal — those are covered by the operating fund.
| Fund | Purpose | Art. C.C.Q. |
| Contingency fund | Major repairs and replacement of common portions | Art. 1071 |
| Operating fund | Day-to-day expenses: cleaning, concierge, snow removal, common electricity | — |
| Self-insurance fund | Insurance deductibles and losses not covered by the syndicate's policy | Art. 1071.1 |
| Treasury fund | Short-term liquidity reserve to cover collection delays and urgent unforeseen expenses before other funds are mobilized. Recommended best practice, not required by the C.C.Q. | Best practice |
The amounts accumulated in the contingency fund must be partially liquid and available in the short term. While it is possible — and strongly recommended — to invest a portion of the fund in gradually growing instruments over 25 to 30 years (GICs, bonds, conservative mutual funds), the underlying capital must be guaranteed and secure.
THE CONTINGENCY FUND STUDY
Since the regulation adopted by the Québec government in 2025, the condominium corporation's board of directors has been required to obtain a reserve fund study at least once every five years. The study must be prepared by a qualified professional, such as a professional engineer (OIQ), architect (OAQ), chartered appraiser (OEAQ), professional technologist (OTPQ), or Chartered Professional Accountant (CPA).
The study is prepared based on the technical description contained in the maintenance logbook, as well as the repairs and maintenance anticipated over the next 25 years. It must include, at a minimum, the following elements:
- The current balance of the contingency fund
- An estimate of the cost of each major repair and replacement, with the estimated year of completion
- A recommendation on the amount that should be available at the start of each year and the precise annual contributions required
- A clear and transparent explanation of the financial calculations used
WHY DOES THIS MATTER TO YOU?
An underfunded or poorly managed contingency fund presents major and immediate risks:
| Risk | Concrete consequence |
| Unexpected special assessments | Sudden emergency calls for funds in case of a major component failure — sometimes several thousand dollars per unit |
| Value depreciation | Lack of maintenance degrades the building and drives down its market value |
| Owner disputes | Frequent internal conflicts over the financing of required work |
| Financing difficulties | Buyers and financial institutions are more reluctant to transact with an underfunded syndicate |
Conversely, a well-managed fund ensures the preservation of market value, guarantees equity between current and future owners, and provides financial peace of mind by avoiding surprises.
WHAT BILL 16 CHANGED
Since the major reforms brought by Bill 16 (2020), syndicates have the strict obligation to have the contingency fund study carried out by a qualified professional. This process determines the exact amount each owner must contribute annually so that the fund will be sufficient when the work becomes necessary. Contributions must reflect the building's actual needs.
In summary: The contingency fund is the financial health and technical sustainability of your co-ownership. It is a legal obligation, an indispensable planning tool, and a patrimonial protection for everyone. Before buying a condo, always ask about the state of the contingency fund — a simple question that could save you thousands of dollars.
Where to start?
Do you need help with a condo purchase process, or are you a board member wishing to bring your syndicate into compliance with the new legal requirements? Consult your lawyer or contact us at Fiset Legal for expertise in real estate and co-ownership law.
The financial health of your building starts with a well-managed contingency fund.
