Managing condominium charges is a major challenge, essential to the smooth running of the building. It is with this in mind that we offer you some insight into the establishment of a distribution key for the common areas for restricted use, which is an exception in your declaration of co-ownership. Rigorous and transparent management of these charges is essential to ensure fairness between co-owners, while relying on tools such as the register of private portions.
Condominium construction is booming in Quebec, and it is diversifying, meeting a range of needs with offers that combine accessibility and refinement. These residential complexes include a variety of accommodations, some with large terraces, generous floor-to-ceiling windows, dedicated parking spaces and other exclusive amenities, while others, more modest, are devoid of them. The evaluation of contingency funds makes it possible to anticipate the expenses related to the maintenance of these infrastructures, thus guaranteeing sound and sustainable financial management.
These privileged dwellings, which enjoy exclusive rights to certain common areas, are generally allocated a share adjusted to their share of ownership. However, faced with significant maintenance and renovation costs of these common areas, the declaration of co-ownership may stipulate a modified distribution of charges for major works and the renewal of common areas for limited use.
It is crucial to determine whether such provisions are mentioned in your declaration of co-ownership, which involves an understanding of the fundamental principles governing the distribution of expenses.
Common expenses include expenses related to condominium living and building management, including the contingency fund. These charges are divided into several categories:
- The general common expenses concern all the co-owners and cover the administration, maintenance and conservation of the shared spaces. They are distributed according to the relative value of each lot.
- The special common expenses affect only certain co-owners and relate to the expenses specified in the declaration of co-ownership, including the maintenance and routine repairs of the restricted common portions, in accordance with article 1064 of the C.C.Q.
- The expenses related to the contingency fund are intended to finance eligible major works, distributed among all the co-owners according to the relative value of their lot, taking into account the imperative of conservation of the building incumbent on the syndicate.
The establishment of a distribution key is necessary when the declaration of co-ownership recommends a specific distribution method for certain expenses. Several questions then emerge:
- Does this method concern a sub-group of co-owners?
- Does the size of the costs justify the development of a detailed breakdown?
- Does the declaration provide that these charges are taken directly from the syndicate’s funds?
A “yes” to these questions strongly suggests the implementation of a distribution key to make the calculation of contributions more fluid.
Let’s take the concrete example of a condominium of 20 apartments that must distribute the contributions to the contingency fund, including 10 outdoor parking spaces subject to a specific distribution as indicated in the declaration of co-ownership.
Suppose that a contingency fund study has been carried out for this building and that recommendations have been made to the Board of Directors.
Financial distribution of co-ownership fees and contingency funds: deciphering and implementation
At the heart of the rigorous management of a condominium is the judicious evaluation and distribution of financial burdens. For the ten co-owners sharing outdoor parking lots, the amount amounts to $100,000. When all the common elements are included, the sum rises to $900,000. As for the contingency fund, one million dollars is projected, with a recommended annual contribution of $10,000 to cover all the expenses stated.
Firstly, it is necessary to aggregate the costs, differentiating between those shared by all the co-owners and those specific to some, such as parking holders. Here, the calculation reveals $900,000 for the set and $100,000 for the specified group.
Second, the relative proportion of each total is determined. Of the million planned, 90% of the costs concern all co-owners and 10% those with parking.
Thirdly, the distribution of general expenses takes place. With 90% of the total costs, or $9,000, allocated to general common expenses, this amount is divided among all the co-owners according to the value of their respective shares.
Fourth, the sharing of specific burdens applies. For co-owners of parking lots, $1,000 will be distributed, representing $100 per owner.
Who is able to calculate this distribution key? Several steps are to be considered, potentially including the expertise of a notary to interpret the declaration of co-ownership, as well as the intervention of a professional to evaluate the costs of the work. With this data, the board of directors or manager will be able to establish a fair distribution.
Note that the distribution key is a scalable and approximate tool. It is therefore crucial to keep the supporting documents used to draw it up.
