Article 154 of Bill 16, adopted in 2019, continues to raise many questions in the field of co-ownership. This transitional provision, which grants syndicates a period of “up to ten years” for their contingency fund to become “sufficient,” appears clear at first glance. In practice, however, it raises significant interpretative issues with direct consequences on the financial planning of syndicates and on the ability of co-owners to contribute to replenishing a contingency fund that has often been undercapitalized for many years. It remains essential to clarify its intent to ensure consistent application across all co-ownerships.
The true meaning of the ten-year period
Section 154 of Bill 16 (2019, chapter 28) provides::
« If the contingency fund study required under article 1071 of the Civil Code, enacted by paragraph 3 of section 39, reveals that the fund is insufficient to cover the estimated cost of major repairs and the cost of replacement of common portions, the board of directors must determine the sums to be paid into the fund each year to ensure the fund will be sufficient after a period of not more than 10 years after the date on which the first study is obtained. »
This provision has sometimes been misinterpreted. Some directors believe they have a full decade to reach the balance recommended in the study, adjusting contributions at their own pace. Others think that this period grants them a respite before increasing the payments required from co-owners. In reality, the ten-year period is neither a reprieve nor a right to budgetary procrastination: it is a unique, non-renewable transitional measure designed to correct historical underfunding through an immediate and progressive catch-up plan. The ten-year countdown begins upon receipt of the first contingency fund study prepared by a professional.
Thus, postponing the implementation of the catch-up plan by one, two or ten years deprives co-owners of the one opportunity granted by the legislator to restore the fund’s financial balance. Section 154 does not relieve syndicates from promptly following the study’s recommendations; it merely allows them to spread the corrective measures over time, in keeping with the principle of intergenerational equity among co-owners.
The obligation to set contributions in accordance with the recommendations
Section 153 of Bill 16 (2019, chapter 28) provides::
« The board of directors must, not later than 30 days after the first annual general meeting held after obtaining the first contingency fund study in accordance with section 151, determine the sums to be paid into the contingency fund under the third paragraph of article 1071 of the Civil Code, enacted by paragraph 3 of section 39.»
This article directly refers to article 1071 of the Civil Code of Québec, which states:
« The sums to be paid into the contingency fund are fixed on the basis of the recommendations made in the contingency fund study and taking into account ongoing developments in the co-ownership, in particular the amounts available in the contingency fund.»
The board of directors must therefore follow the study’s recommendations. It has no discretion to disregard or delay their implementation. However, since many syndicates currently have underfunded contingency funds due to years of insufficient contributions, the legislator provided for an exceptional ten-year amortization period.
The board must therefore:
This planning must be documented and rigorous. The shortfall must be clearly established in the study, and the proposed schedule must not compromise the syndicate’s ability to carry out the required work. Deferral cannot justify inaction. In short, the flexibility granted by section 154 is limited by the syndicate’s primary mission: ensuring the preservation of the building.
The role of the professional: Assessing what’s possible
The professional responsible for preparing the contingency fund study is not tasked with designing the syndicate’s financial strategy, but with identifying the technical needs and replacement timelines of building components. Their role is to propose realistic adjustment scenarios, such as gradual increases in contributions or prioritization of certain work.
The board must then implement the catch-up plan, possibly with the help of a manager or accountant. However, the professional must flag any critical gap between available resources and identified needs to avoid a permanent structural deficit.
As article 1039 of the Civil Code of Quebec reminds us, the syndicate is legally bound to ensure the preservation of the building. It must therefore strike a balance between the financial reality of the co-owners and the need to invest adequately to maintain the building’s integrity.
A balance between financial viability and building integrity
This balance, often difficult to achieve, must guide every decision related to contingency fund planning. Spreading the replenishment over ten years can never be done at the expense of the building’s preservation, nor can it undermine the syndicate’s ability to obtain insurance coverage in compliance with article 1073 of the Civil Code of Québec.
Improperly deferred work can, in fact, weaken this insurability. A neglected roof, an overlooked waterproofing membrane, or an aging plumbing system may prompt an insurer to impose coverage exclusions, exorbitant premiums, or even an outright refusal to insure.
The example of a roof at the end of its life
For example, suppose a building’s roof must be replaced in five years at a cost of $150,000. Its useful life is 25 years. In principle, the syndicate should have set aside $6,000 per year for 25 years to pay for the work. After 20 years, however, it has only accumulated $50,000. Even if it increases its annual contribution to $6,000, it will have only $80,000 at replacement time, leaving a $70,000 shortfall.
The board must therefore plan for this catch-up. Depending on the roof’s actual condition, the professional might recommend spreading the replenishment of the fund over ten years while carrying out interim maintenance work (sealing, localized repairs, waterproofing treatment) to extend its lifespan. However, any postponement must be justified. If the roof already shows signs of infiltration or delamination, delaying its replacement would breach the syndicate’s duties and could jeopardize insurance coverage. The board must then plan for replacement within five years. Thus, the ten-year period is not a fixed deadline but an economic flexibility margin allowing the syndicate to adapt its planning to the building’s condition.
A Case-by-Case approach as the only valid method
Article 154 of Bill 16 does not create an absolute legal rule but rather a contextual transitional measure. Each building has its own characteristics — age, physical condition, maintenance history, the co-owners’ financial capacity, and even the syndicate’s level of management. The professional who signs the contingency fund study must therefore exercise sound judgment on a case-by-case basis, clearly identifying:
This approach requires rigorous analysis, based on proper inspections and clear communication with the board of directors.
Shared responsibility
Directors must understand that spreading capitalization over ten years does not relieve them of their duty to preserve the collective asset. If they unjustifiably delay necessary work, they risk liability for failure to act in managing the syndicate. The plan proposed by the professional is not binding; it is a recommendation based on technical expertise. The board may adapt it but not ignore it. Any significant deviation must be justified by a documented decision grounded in duly motivated financial or strategic considerations. This traceability requirement demonstrates the directors’ diligence and compliance with article 1039 C.C.Q., which imposes preservation of the building. Likewise, co-owners must understand that restoring the contingency fund, though gradual, is unavoidable. Chronic underfunding endangers their own property’s value and undermines the co-ownership’s financial stability.
Toward a common interpretation
To avoid missteps, all stakeholders—lawyers, managers, and building professionals—must adopt a uniform and prudent reading of this transitional provision. The ten-year period must be understood as a single and unique adjustment window triggered upon receipt of the first contingency fund study. It aims to correct, not to postpone.
Finally, it must be acknowledged that exceptional circumstances (pandemic, inflation, labour shortages, geopolitical upheavals) may justify new catch-up measures ten years later, adapted to the economic reality of that time. However, such measures can never renew the transitional spirit of section 154, which remains an exceptional provision.
In short, the success of this mechanism relies on enlightened collaboration: the professional defines the technical parameters of the catch-up, the syndicate translates them into financial measures, and the co-owners provide the funding.
Thus understood, the ten-year period is not a permissive delay but a collective commitment to restoring the financial health of the contingency fund, in keeping with the fundamental principle of building preservation.
Yves Joli-Coeur, Ad. E.
Lawyer
Dunton Rainville
3055 Boulevard Saint-Martin O
Bureau 610
Laval, QC H7T 0J3
Tél. : (450) 686-8683
Courriel : [email protected]
The columns express the personal opinions of their authors and do not engage the responsibility of the site publisher, Condolegal.com Inc. The content and opinions expressed in a column are solely those of the author.
