Relative value of a fraction

Divided co-ownership is a housing formula that usually has more than one owner.  In order to assess and quantify the interest of each person in the building, the legislator has provided that the right of ownership of each owner in the common portions is proportional to the relative value of his fraction.  To determine the relative  value of a unit, it must be compared with the value of all the other units of the co-ownership.  The relative value is calculated and usually expressed as a percentage or thousandths.  Its distribution is recorded in the declaration of co-ownership, (the  constituting act of the co-ownership).

Finally, it should be noted that the relative value determines the voting power in the meeting of co-owners and serves in particular as a basis for calculation in the distribution of the co-owners of the common expenses.

 Criteria for determining relative values

Section  1041 of the Civil Code of Quebec provides that the relative value of each fraction of a divided co-ownership is determined (regardless of its use) in relation to the value of all the fractions, in the light of the  following four criteria:

1. The nature of the private portion. This criterion makes it possible to consider the consistency, material condition and physical structure of the unit.  Thus, account must be taken of the specific qualities of the construction (e.g. the nature of the materials used) and the presence of accessories (such as a balcony or terrace). An apartment will thus have a higher relative value than a storage locker located in the basement of the building.
2. The destination of each of the private portions. It is thus permissible to grant a different relative value to a fraction comprising a commercial private portion than that granted to a fraction comprising a residential private portion by reason of their respective purpose. However, this factor does not have to be considered when all private portions have the same destination.
3. The dimensions (area and volume) of each private portion, i.e. the area of surface and volume measured within the boundaries of each private portion. For example, a private portion, which has a larger area and volume than the others, will have the highest relative value of the building. However, the volume sub-criterion will be neutral if the height of the premises is the same for all units. In the latter case, the surface area will become the only relevant sub-criterion relating to dimensions. 
4. The location of the private portion. For example, a corner unit will be advantaged because it is brighter because of the windows it enjoys. However, the relative value of a unit will be less if it is located near an elevator or waste chute.

Method used to establish relative values

The constituting act of co-ownership determines the relative value of each fraction. It shall also indicate the method used to establish it. The person who drafts the declaration of co-ownership must make known the weighting given to each of the criteria listed above, without presenting, in detail, the calculations and considerations that led to the final establishment of the relative value. The declarant (who is usually the developer) must assess each unit on the same date. It generally establishes a theoretical marketing price for each unit on the basis of the foregoing, i.e. with the same criteria as those set out in article 1041 C.c.Q. Once done, it compares these theoretical marketing prices to each other to calculate the relative value of each fraction.

Utilities

This value is then used to measure the rights and obligations of each co-owner within the co-ownership. It determines:

• The share of the right of ownership that the co-owners hold in the common areas. For example, a co-owner could hold an undivided share equivalent to 15% of the common elements; 
• The number of votes that the co-owners may cast at the meeting of the co-owners. The higher a co-owner holds, the more his weight in the vote is preponderant;
• The distribution of common expenses between the co-owners.  These costs are distributed among the various co-owners in proportion to the relative value of their fraction;
• The distribution of compensation for a substantial loss ;
• The subjection of each person to certain collective obligations.

In addition, article 1102 of the Civil Code of Quebec prohibits the syndicate of co-owners from modifying the relative value of a fraction without the consent of the co-owner concerned.

Declaration of co-ownership

Article 1053 of the Civil Code of Quebec provides that the constituting instrument of co-ownership must determine the relative value of each fraction that composes it and indicate the method used to establish it. The use of the word "method" makes it possible to affirm that it is not enough to confine oneself to the mere enumeration of the elements considered to fix this value (nature, destination, dimension and situation). It is imperative for the declarant to also indicate the weighting given to each of these elements.

Revision

The purpose of knowing the method chosen is to enable co-owners to determine more accurately whether the relative value of their fraction has been established and, if necessary, to request a review of the distribution of expenses and the relative value of their fraction.  It should be remembered that a co-owner has the possibility later to revise this relative value, in certain situations, under certain conditions and according to certain formalities: it is either an amendment to the declaration of co-ownership or an appeal for revision of the relative value.

WHAT YOU SHOULD KNOW! ​Establishing the relative value of a unit involves weighting each of the four criteria mentioned above. Depending on the particularities of the building and the private portions in relation to each other, the weighting of each of these criteria may be zero or, on the contrary, decisive in establishing the relative value.

WHAT TO KEEP IN MIND: The method of calculating the relative value and the criteria used must appear in the declaration of co-ownership, a mandatory basic document for the organization of the co-ownership. However, the precision of the detail of the calculation is not mandatory.

WARNING!​ Article 1102 of the Civil Code of Quebec stipulates that "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 (...) is without effect". Therefore, to modify in a conventional way the relative value of part of the fractions of the co-ownership, or in totality, it is necessary to obtain the approval of each of the co-owners concerned by the modification.

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