Whether you are a real estate developer (for a new building) or several owners of an existing building who wish to convert it, the rules for subjecting a building to divided co-ownership are the same. The creation of a divided co-ownership is necessary when an immovable must be divided into lots composed of a private portion and a share of the common portions, and which belong to one or more different persons. The community of co-owners acquires the status of legal person from the day a declaration of co-ownership is published at the Land registry office (Land Register). The legal person thus constituted takes the name of “syndicate of co-owners”.
Its mission is to ensure the " preservation of the immovable, the maintenance and administration of the common portions, the protection of the rights appurtenant to the immovable or the co-ownership, as well as all business in the common interest ". To form this co-ownership several steps involving many protagonists are necessary.
Preparation of a cadastral plan
The land surveyor intervenes from the outset of the establishment of the co-ownership. His mandate is to establish the cadastral plan, so that the declaration of co-ownership can be published. To this end, he must:
In a residential tower, the surveyor will conduct true measurements of common and private portions, once the construction of the foundation and main walls of the building of the immovable are sufficiently advanced. When the surveyor has completed his work, an application is filed with the relevant municipality, in order that a cadastral operation (subdivision) be authorized.
The plans prepared by the land-surveyor are then deposited at the Ministère des ressources naturelles et de la faune (Ministry of Natural Resources and Wildlife), management of cadastral registrations. This department manages the Cadastre of Québec. Following the cadastral operation that allows the creation of the various common and private portions, an initial certificate of location is prepared.
Drafting the declaration of co-ownership
From the design stage of the project, the developer must ask that the declaration of co-ownership be drafted. This exercise should be entrusted to a notary with an adequate legal knowledge in the field of co-ownership. Thus, he will be able to customize the content of the document to the specificities of the immovable, while respecting the mandatory rules of the law and the constraints of municipal regulations. He will ask the developer and his hypothecary creditor, if applicable, to sign this declaration of co-ownership.
Registration of the declaration of co-ownership
Once the immovable is the object of a cadastral plan, instrumental to the immatriculation of common and private portions, and the co-ownership declaration received by the notary, the latter may then request the registration the declaration of co-ownership in the land register.
Administrative Housing Tribunal
Once a building has or has had, in the last 10 years, at least one dwelling that was rented or offered for rent (for residential purposes), the conversion of such a building into a divided co-ownership is subject to strict formalities. For example, a declaration of co-ownership cannot be registered on such building without the Administrative Housing Tribunal having previously authorized the owner to proceed with the conversion. Once the owner has obtained permission to convert, he or she has one year to have the declaration of co-ownership registered on the Land Register. After this period, or failing to obtain such authorization, any interested party, including the Administrative Housing Tribunal, may apply to the Superior Court for the cancellation of the registration of a declaration of co-ownership. It should be remembered that the Administrative Housing Tribunal authorizing the conversion of the building must identify the lessees against whom the right to retake possession cannot be exercised. The Administrative Housing Tribunal’s decision must also be attached to the declaration of co-ownership.
Immatriculation of the syndicate
Within 60 days of publication of the declaration of co-ownership in the land register, the syndicate must be immatriculated at the Registraire des entreprises du Québec (Registrar of entreprises of Quebec).
Startup of the co-ownership and collection of common expenses
The official date of creation of a co-ownership gives rise to the first financial year of the co-ownership. The budget forecast must be established before the publication of the declaration of co-ownership. All prior expenses remain the responsibility of the original owner(s), which is (are) usually the developer(s).
As for subsequent expenses, they should be allocated amongst the lot owners, which requires adjustments of the common expenses between the developer and the buyer in accordance with the dates of the sales. This is why the interim director must collect the contributions to the common expenses of all owners, including those of the developer, who must pay the contributions of unsold fractions.
Startup of the syndicate
The startup of a syndicate is sometimes difficult. As co-owners do not know each other, they might first seek to take possession of their dwelling and neglect the proper management of their co-ownership. This is why it is important to ensure proper startup, which involves due diligence and care.
The problems encountered in the process can be complex, numerous and diverse in nature. From the outset, the interim director appointed by the developer may be partial, in that he may seek to prioritize the interests of the developer. Thus, the interim director may transfer to the co-ownership charges accruing in principle to the developer (ex.: housekeeping costs resulting from the completion of common or private portions).
Moreover, this interim director may have committed the co-ownership in various contracts detrimental to the co-ownership. . However, the Civil Code of Québec provides that within 60 days of the election of the new Board of Directors, the syndicate may, without penalty, terminate any contract with a term of more than one year. The said contracts may concern the maintenance of the immovable or other types of services. This being stated, you are invited to consult the factsheet entitled End of the interim administration.
WHAT YOU SHOULD KNOW! Generally, the construction of a co-ownership will start when the sales are sufficient, that is to say, when the developer has signed enough preliminary contracts with buyers-promisors.
WHAT TO KEEP IN MIND: Divided co-ownership is created on the date on which the declaration of co-ownership is published in the land register. Thus, a private portion (e.g. an apartment) cannot be sold by deed of sale until the declaration of co-ownership is published. However, it is possible to sign a promise to purchase before the filing of the cadastral plan and the publication of the declaration of co-ownership. This promise to purchase then binds both parties. They will have to sign the deed of sale at the time agreed between them.
WARNING! The date of birth of a co-ownership is the starting point of its first financial year. Any and all expenses related to the immovable prior to its creation must remain the responsibility of the developer who published the declaration of co-ownership.
