Papineau Avocats Inc: Real estate and co-ownership law

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THE NOTIONS OF «REPLACEMENT» AND OF «ALTERATION»

by: Me Serge Abud, PAPINEAU AVOCATS inc.

You just bought an appartment in a 20 year old co-owned bulding. Before buying, you decided to make a quick inspection of the premises by yourself and the cleanliness of the common portions was enough to convince you.

After a few months, the syndicate of co-ownership announces that all exterior doors and windows should be replaced because there is evidence of wear. This calls for a major investment of tens of thousands of dollars that will hurt your budget badly since the contingency fund of your condo is undercapitalized. You disagree with this decision and you think that it should be submited to a vote of the co-owners. You are pretty sure that the Quebec civil code backs up your opinion. Section 1097 C.c.Q. stipulates that a majority vote of the co-owners representing three-quarters of the voting rights of all the co-owners is required for decisions regarding «work for alteration, enlargement or improvement of the common portions, and the apportionments of its cost.»

You will certainly oppose the project, along with other co-owners sharing your point of view, but you will have to learn from the events happening afterwards that things are more complex than it looks when you are dealing with the law. Properly identifying the portion of the immovable subject to the necessary work is the first step to take in this case. Most declarations of co-ownership consider exterior doors and windows as common portions of the building.

Secondly, the nature of the work to be done has to be determined before applying section 1097 C.c.Q. to reach a valid decision.

Does section 1097 C.c.Q. imply that the replacement of existing doors and windows is an improvement of the common portions? In the case Dépanneur Paquin et Fils inc. c. Le Syndicat de l'édifice Emmanuel 1, judge Robert Legris of the Superior Court made a close examination of the words chosen by the legislator in section 1097 C.c.Q. He came to the conclusion that the word «alteration» was used in reference to a physical alteration of the common portion, «a process going further than simple management and challenging the right of ownership of all the co-owners». This means that the common portion will be different after the alteration.

Judge Legris also adds that the words «enlargement» and «improvement» must be understood as examples given to clarify the larger notion of «alteration» in section 1097 C.c.Q.

Judge Jean-Pierre Senécal, also of the Superior Court, says that «it's impossible to make categoric distinctions between improvement and repair, since any work on very serious defects will not only constitute a repair but will also be a real improvement.» 2

With new doors and windows replacing the old, will the common portion involved be changed to the point that it will have been «altered» or even «improved»?

However, section 1071 C.c.Q. stipulates something else, that is not mentioned in neither judges Legris or Secécal's decision: «according to the estimated cost of major repairs and the cost of replacement of common portions, the syndicate establishes a contigency fund [...] The syndicate is the owner of the fund.» This fund is therefore constituded to provide for predictable work of replacement and/or preservation of the common portions. The replacement of the common portions by the syndicate is thus part of its prerogatives in the sense that it is a practical fulfilment of its legal duty to preserve the immovable, as indicated in section 1039 C.c.Q.

The notion of replacement must therefore be understood from the perspective of the preservation duty of the syndicate. It does not challenge the ownership right of the co-owners, but garantees them the preservation of the immovable in its initial state.

The board of directors will go beyond its duty of preservation whenever it decides to alter or improve the common portions, in which case section 1097 C.c.Q. applies and the vote of the co-owners becomes necessary. The replacement of an obsolete common portion does not call for a general meeting of the co-owners, because it is neither an alteration nor an improvement of the common portion. Moreover, those preservation work may also have the purpose of updating the immovable. In the sense of section 1097 C.c.Q., for instance, newer and better technology windows do not improve the immovable itself, even though the object of the replacement is actually improved.

So it must be understood that the cost of the planned work has nothing to do with its nature: a 250 000$ necessary roof replacement will exlusively be decided by the syndicate while a 10 000$ improvement requires a vote by a majority of the co-owners in conformity with section 1097 C.c.Q.

Dividing the decision-making power between the board of directors and the general meeting of the co-owners prevents the later from interfering with the obligation to preserve of the first by abusing of the votation mentioned in section 1097 C.c.Q. Assimilating a replacement of the common portions to an alteration thereof would only result in paralyzing the decision-making process by drawing a red herring across the trail. But this does not mean that the co-owners have no control at all over this kind of problem. Section 1072 C.c.Q. forces the board of directors to consult every year with the general meeting of the co-owners on budget issues and section 1087 C.c.Q. stipulates that a budget forecast must be sent along with the notice calling the meeting.

1 400-05-000330-945, [1995] R.D.I. 57 (C.S.)

2 Bernard c. Syndicat des copropriétaires Condo Formula 1, 505-05-001228-953,AZ- 96023024 (C.S.)

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