Bill 16: A Major Change Is Reshaping the Condo Market

Since the Québec government adopted Bill 16, divided co-ownership properties have faced a much stricter framework than before. Maintenance logbook, contingency fund study, certificate on the condition of the co-ownership at the time of sale: the requirements are piling up, and buyers, their brokers and their lenders are increasingly aware of it.

What concretely changes is the way a condo is evaluated. Before, most of the attention was on the unit itself: renovations, floor, exposure. Today, a growing share of the analysis focuses on the co-ownership as a whole: its financial health, its documentation, its upcoming work.

Two identical units in two different buildings no longer necessarily sell the same way.

The contingency fund: many sellers' blind spot

It is probably the least understood element, and yet the one most scrutinized by informed buyers.

The contingency fund is used to finance major repairs to the common portions: roofing, windows, façades, elevators, parking, common plumbing. For years, many syndicates of co-owners contributed in a rough-and-ready way, without really assessing the building's actual long-term needs.

Bill 16 now requires this assessment to be done seriously. And in several buildings, the result is uncomfortable: the accumulated reserves are well below the upcoming costs. In some cases, the gap amounts to tens, or even hundreds, of thousands of dollars.

When a buyer or their broker discovers this gap, one of three things happens: they negotiate the price down, they add conditions, or they walk away.

What Bill 16 now makes visible

This point is important to understand: Bill 16 doesn't create the problems. It simply makes them impossible to ignore.

Aging roofs, underfunded reserves, poorly planned work… all of this existed before. But in a market where few people asked the right questions, it stayed under the radar. Today, buyers ask for the documents. Brokers analyze them. Financial institutions look at them. And so do insurers.

A well-managed, well-documented and financially sound co-ownership now inspires much more confidence, which translates concretely into fewer complications when selling.

What it changes if you're thinking of selling

If you plan to sell within one to three years, the condition of your co-ownership is no longer a secondary detail. It is a variable that can influence the price you obtain, how smoothly the transaction goes and the number of serious buyers you will attract.

A few questions are worth asking now, before putting your unit on the market:

• Has your contingency fund been the subject of a recent study?
• Is any major work planned or anticipated in the coming years?
• Does your syndicate of co-owners have its documents in order: minutes, maintenance logbook, financial statements?
• Are there any special assessments under way or expected?

These are not questions your buyer will forget to ask. You might as well have thought about them beforehand.

Why now is the right time to take a closer look

Montreal's condo market is going through a period of transition. Co-ownerships that have managed their documentation and finances well will fare relatively well. Those that have fallen behind will have to deal with more wary buyers, longer timelines and sometimes prices adjusted accordingly.

This transition is still under way. Which means that a seller who takes the time to understand their co-ownership's situation today still has a head start over those who will find out at the last minute… at the time of the transaction.

Thinking of selling your condo and want to understand how the condition of your co-ownership could influence your transaction? That's exactly the kind of analysis we do with our clients before putting a unit on the market.