The Contingency Fund Study and Bill 16 in Montreal

The carrying out of a contingency fund study every five years is one of the new features introduced by Bill 16. You are therefore now obliged to carry out a contingency fund study periodically. The contingency fund is the pillar of a condominium’s financial management, designed to anticipate expenses related to major repairs and the replacement of the components of the common portions of a building. Unlike funds for daily maintenance, the contingency fund focuses on financing substantial work over the long term. This is an essential strategic tool, not only to maintain the value of the building, but also to protect the co-owners from unforeseen special contributions and the financial stresses that these may cause.

Why is a contingency fund study crucial?

Understanding the difference between routine maintenance and pension provision

It is essential to distinguish between routine maintenance and major repairs. While the operating fund covers the day-to-day maintenance and management costs (cleaning, minor repairs, electricity, etc.), the contingency fund is specifically designed for major interventions, such as replacing the roof, elevators, plumbing systems, or repairing facades.

This distinction is crucial because the co-owners can easily underestimate the extent of the future work to be done. Without an adequate contingency fund, condos are exposed to significant special assessments, which can be a source of stress and disagreement within the community.

A lever for the proactive management of condominiums

Conducting a contingency fund study not only allows you to anticipate future needs, but also to plan interventions strategically. By accurately assessing the financial needs over a period of 25 to 30 years, the co-owners can fairly distribute the expenses over the years, thus ensuring financial stability for the co-ownership.

This helps to avoid unpleasant surprises and emergency situations where special contributions would be required to finance critical work. By taking a proactive approach, condominium corporations can face management challenges with more peace of mind and maintain cohesion within the community.

Bill 16: a legal framework strengthening pension provision

Since December 2019, Bill 16 requires condominium syndicates in Quebec to conduct a contingency fund study every five years. This measure is intended to ensure that each condominium has a clear and adequate plan to finance major repairs and replacement work on the common elements.

Far from being a simple formality, the study of the contingency fund is an essential tool for sound and transparent management. It makes it possible to define the amounts to be paid into the fund, based on precise projections and professional recommendations, thus ensuring the sustainability of the building while reducing the financial risks for the co-owners.

The key steps in the study of contingency funds

in Montreal with Planibâtimat

At Planibâtimat in Montreal, our approach to contingency fund study is based on a rigorous and methodical process, backed by years of expertise in property management and financial valuation. Each step is designed to maximize the accuracy of the valuation and offer condominium syndicates solutions adapted to their specific needs.

1. In-depth review of co-ownership documents

The first step in our contingency fund review process is to analyze all of the condominium’s legal and financial documents in detail, such as the declaration of co-ownership, past financial statements, as well as maintenance and management reports. This analysis allows us to fully understand the specific issues of the building, as well as the repairs carried out and planned.

This initial analysis work is essential to identify the weak points of the current management and assess whether the existing contingency fund is sufficient to meet the future needs of the condominium.

2. Comprehensive visual inspection of common areas

The 2nd step of the contingency fund study consists of a detailed visual inspection of all the common areas of the building and then carried out by our certified technologists. This step aims to assess the condition of the building’s components, such as roofs, heating systems, elevators, parking lots and facades.

We identify signs of deterioration and estimate the remaining service life of the individual elements, allowing us to draw up a list of urgent or medium-term works. This assessment is essential to plan the interventions necessary to maintain the building and avoid unforeseen expenses in the short term.

3. 25 to 30 year financial projection

Based on the results of the inspection and document analysis, we draw up a detailed financial projection covering a period of 25 to 30 years. This projection includes an estimate of the costs of major repairs and replacement of components, while taking into account factors such as inflation, variations in construction costs, and environmental requirements.

This projection will be part of the contingency fund study and will determine the annual amounts that the co-owners will have to contribute to ensure adequate financing for future work. We provide several financial scenarios, allowing the board of directors to choose the best strategy according to the needs and financial capacities of the condominium.

4. Proposal of contingency fund contribution scenarios

Based on the results of the study, we propose different scenarios for contributing to the contingency fund in Montreal. These scenarios take into account the current state of the fund, the needs of the building and the financial capacities of the co-owners. Each scenario is designed to minimize the financial impact on the co-owners while ensuring that the funds will be available at the appropriate time to carry out the necessary work.

What you receive with Planibâtimat

By calling on Planibâtimat for your contingency fund study, you benefit from a complete and professional service, in accordance with legal requirements and adapted to the specific needs of your condominium. Our expertise in contingency fund valuation allows you to receive a complete report, including:

• A detailed expert report in accordance with Bill 16: This report includes a precise assessment of the condition of the common elements of the building, as well as a financial projection over 25 to 30 years. This document makes it possible to justify the amounts to be paid into the contingency fund and to plan future interventions.
• A maintenance schedule over several decades: This schedule specifies the scheduled dates for the maintenance or replacement of the various components of the building, thus helping the board of directors to anticipate the work and avoid costly emergency interventions.
• Strategic recommendations: We offer several contribution scenarios to help the board define the best financial management strategy. These scenarios are designed to balance the needs of the condominium and the financial capacities of the condominium owners.

The impact of Bill 16 and the challenges for your co-ownership

Bill 16 structured the management of condominiums by imposing strict obligations regarding the evaluation of contingency funds and maintenance logbooks. Each property manager must now comply with these legal requirements to ensure transparent management and avoid potentially heavy financial consequences.

One of the new features introduced by Bill 16 is the obligation to carry out a contingency fund study every five years, thus ensuring that the financial needs of the co-ownership are regularly updated. This measure aims to avoid chronic underfunding and to ensure that condominiums have sufficient funds for major work.

Why Planibâtimat is the ideal partner for your needs

Planibâtimat stands out for its personalized approach and expertise in the valuation of contingency funds and the management of real estate assets. We understand that each condominium is unique, and that is why we offer tailor-made solutions, tailored to your specific needs. With our certified technologists, we provide you with detailed reports and strategic recommendations that meet legal requirements and maximize the profitability of your contingency fund.

Protect your wealth with informed financial management

By choosing Planibâtimat for the study of your contingency fund, you are choosing proactive management, in accordance with the most recent standards, and peace of mind for all co-owners. Our expert and personalized approach ensures that you have the tools you need to anticipate your building’s needs, while ensuring a fair distribution of costs.

At Planibâtimat, we are perfectly equipped to meet your needs. Thanks to our team of certified technologists, we are able to provide a contingency fund valuation service in accordance with the recently implemented Bill 16.

THE CONTINGENCY FUNDS ACT:

… The law stipulates that all unions, without exception, must conduct an evaluation of their contingency fund and renew it every five years. This evaluation must be carried out exclusively by a member of a professional order, as designated by government regulation.

With regard to the maintenance logbook, the law specifies that “the board of directors must draw up a maintenance logbook for the building, which includes a record of the maintenance work carried out and to be carried out. This logbook should be kept up-to-date and reviewed periodically. The form, content, manner of keeping and revising it, as well as the persons authorized to set it up and revise it, are defined by the government regulation” (article 1070.2 C.C.Q.).

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