When the sale concerns a fraction of a divided co-ownership of a residential immovable, the preliminary contract must be accompanied, at the time of its signature, by certain documents (such as forming with it an indivisible whole). This includes the information note on the essential characteristics of the project, whether it is a new co-ownership or under construction, or a building that has undergone major renovations to the point of now being considered new. In addition, the contract of guarantee will complete the preliminary contract. It concerns immovables or projects subject to the Regulation respecting the guarantee plan for new residential buildings, i.e. those with no more than 4 private portions stacked one above the other (apartments).
Information note (memorandum)
In the case of the sale of a fraction in a divided co-ownership residential immovable, the Civil Code of Quebec provides that the preliminary contract must be completed by an information note which must be remitted to the promisor-purchaser, at the signing of the preliminary contract.
The information note provides additional protection to the purchaser, as it supplies relevant information on the essential characteristics of the project. It should be given to you if you are considering making a purchase in a new co-ownership or one under construction, or in an immovable which has been the object of major renovations to the extent that it is deemed to be a new building.. In the case of the resale of an apartment in an existing co-ownership, the vendor – if he is not the developer or the builder of the co-ownership – is not compelled to give you an information note at the signing of a bilateral promise of purchase and sale.
The content of an information note?
The Law provides that the information note should include:
Overall property development plan and the general development plan of the project
Even though the bulk of the information therein is self-evident, a portion of the information needs to be explained. The overall property development plan and the general development plan of the project are generally in the form of architectural and preliminary cadastral plans prepared by the land surveyor; they will allow you to have a general idea of the future location of the immovable(s) in the project, more particularly, of the commons portions or common services.
Summary of the specifications
The specifications, which are generally prepared by an architect, are in a technical document describing the materials and components of the apartments and listing among other items, the types of light fixtures, the trade names of the baths, showers, cupboards and kitchen counters. It is therefore essential that you consult this document to know precisely what you are purchasing.
Budget forecast
The budget forecast for the first year of a co-ownership, should be prepared on the basis of a complete year of occupancy of the immovable, from the registration date of the declaration of co-ownership. This budget should include, more particularly, a statement of debts, claims, and general and common expenses. It also indicates, for each fraction, the likely amount of property taxes, the rate of such taxes and the annual amount of contributions to the common expenses. The part of that amount intended for the contingency fund must correspond either to 0.5% of the reconstruction cost of the immovable or to the recommendations made in a contingency fund study. The careful review of the information note will allow you to determine if you can afford living in the co-ownership project, as you will be able to estimate the monthly payment for common expenses.
Statement of the leases granted
The information note must contain a statement of the leases granted by the developer or the builder on the private or common portions of the immovable, indicating the maximum number of fractions to be leased. This information is important as when many apartments are leased in a co-ownership, the cost of the insurance coverage is often higher in comparison with co-ownerships where most of the apartments are occupied by their owners. Furthermore, when the developer rents many units he keeps the votes attached to these units, which gives him a certain degree of control on the decisions at the meetings of the co-owners.
Summary of the declaration of co-ownership
A copy of the draft declaration of co-ownership, even if it is in draft form, or a summary of it, must be annexed to the information note. It is important to read and understand it before committing to buying a condominium unit. The draft declaration of co-ownership should contain essential information such as the purpose of the building, the relative value of the fractions, the share of common charges, the number of votes at the meeting of co-owners, the provisions concerning the insurance of the building, and any penalty clause applicable in the event of a breach of the declaration of co-ownership. This information can influence your purchase decision and future obligations as a co-owner.
In addition, it should be noted that this draft declaration of co-ownership may be modified by the developer before the publication of the final declaration of co-ownership in the land register. It is therefore important to check whether the preliminary contract provides for conditions or remedies in the event of substantial changes to the draft declaration of co-ownership.
Contract of guaranty
For residential projects governed by the Regulation respecting the guarantee plan for new residential buildings, being those comprising four residential superimposed private portions or less, the purchaser and the contractor must sign the contract of guarantee approved by the “RBQ” (Quebec Construction Board). This contract reproduces the provisions of the Regulation respecting the guarantee plan for new residential buildings and describes in detail the coverages offered, the procedure to make a claim and the recourses available in the event of a problem with your contractor. It should provide, amongst other information, the name and addresses of the purchaser and of the contractor, the date and location of the signing of the contract by the contractor, the description of the building, the addresses of the director and the accreditation and licence number of the contractor.
WHAT YOU SHOULD KNOW! Section 55.1 of the Charter of the French Language provides that the information note must be written in French, unless the parties expressly wish to enter into a contract in another language. This express intention of the parties may be expressed in an explicit clause in the contract and related documents.
WHAT TO KEEP IN MIND: Receiving a well prepared and detailed information note shows professionalism on the part of the developer and his wishes to give adequate information to the purchasers interested in his project.
WARNING! Many developers grant leases to telecommunication companies allowing them to install antennas on the roof or the façade of the building. You should be informed of this occurrence before your purchase. The information note include this information.
