The transitional meeting is a key step in the life of a divided co-ownership, marking the transfer of management power from the developer to the co-owners. It usually follows the publication of the declaration of co-ownership and the early stages of building occupancy. It takes place when enough units are sold to allow for adequate representation. This assembly ensures a smooth transfer of management responsibilities to the syndicate. It is at this time that the first board of directors is formed, generally composed of co-owners or people independent of the developer. This transition initiates autonomous governance focused on the collective interest.
When must the transitional meeting take place?
Article 1104 of the Civil Code of Québec provides that the transitional director must call a special transitional meeting within 90 days of the developer no longer holding a majority of votes at the meeting of co-owners. This is a mandatory requirement. If this notice is not given within the prescribed time limit, any co-owner is authorized to call the meeting themselves.
This meeting has two main objectives:
Mandatory rendering of account by the transitional director
In accordance with article 1105 of the Civil Code of Québec, the transitional director must report on his or her administration at the special meeting. This reporting includes:
Among the irregularities sometimes discovered, the developer may not have paid its contributions towards common expenses (condo fees) on unsold lots. Yet, he remains the owner until he sells them. His participation in common expenses is thus compulsory.
The rendering of account of the interim director is important because it allows co-owners:
Financial statements
The notice of this meeting must be accompanied by the financial statements. However, these are very often prepared based on an incomplete fiscal year, due to the very short deadlines for convening this meeting, which is special and not annual.
The expression "accompanied by an accountant's comments" contemplates a professional analysis of the financial situation, not a simple transmission of figures. By law, this reporting is not subject to a vote at the meeting, as it is required by the Civil Code of Québec.
The Superior Court, in Syndicat de la copropriété Le Gutenberg v. Édifices Saint-Georges Inc. also specified that the developer:
"cannot demand that the co-owners and the new members of the board of directors immediately accept, without any reflection or verification, his statements without being able to fully understand them, on the one hand, and demand, on the other hand, to examine the supporting documents he claims to have at his disposal."
Accountant's power of Investigation
According to Article 1106 of the Civil Code of Québec, the accountant has access, at any time, to the syndicate's books, accounts, and supporting documents. The director may require the developer or any director to provide the information and explanations necessary to carry out their duties. This power enhances transparency following the transfer of management.
Ratification of the management by-laws adopted by the transitional director
All management by-laws adopted by the transitional director must be ratified by the co-owners at the first meeting of co-owners. Failure to do so will render them null and void.
Submission of essential documents
Within 30 days following the special transitional meeting, Article 1106.1 of the Civil Code of Québec requires the developer to submit the following documents to the syndicate:
The developer is liable for any damages resulting from its failure to provide these documents or information within the prescribed timeframe.
GOOD TO KNOW! Within 60 days of its election, the new board of directors may terminate, without penalty, any contract entered into by the syndicate prior to its election, provided that the contract concerns building maintenance or other services and that its term exceeds one year.
KEEP IN MIND: This termination right constitutes a legal guarantee offered to the syndicate to ensure that the co-owners themselves take sound and independent control of the building's management.
PLEASE NOTE! The general meeting should not be confused with the legal creation of the co-ownership association: the latter is created by the publication of the declaration of co-ownership in the Land Registry, not during the transitional general meeting.
SEE THE BOOK: Guide de procédure et de fonctionnement des assemblées des copropriétaires - 3e édition
