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Contingency Fund Study: What Every Quebec Homeowner Should Know

Overview

This article provides critical insights into contingency funds for Quebec condo owners. Since 2020, Quebec law requires condominiums to conduct a professional contingency fund study every five years. Many buyers and sellers are unaware of this requirement, which can have significant financial implications.

What is a Contingency Fund?

A contingency fund is a mandatory savings account for a condominium building’s major future repairs. This fund has been legally required in Quebec since 1994, but many buildings fail to maintain adequate reserves.

• Covers major expenses like roof replacements, foundation repairs, heating system upgrades
• Traditionally funded by 5% of common expenses, but often underfunded

What is a Contingency Fund Study?

A contingency fund study is a professional assessment conducted by engineers or architects to determine how much money a condo should be setting aside for future repairs.

The study includes:

• A visual inspection of the building
• Identification of major components needing replacement
• Estimated remaining lifespan of these components
• Projected costs for future repairs and replacements
• Recommended monthly contributions to the fund

Before purchasing a condo, request the most recent contingency fund study. This document will indicate whether a building is financially prepared for upcoming maintenance.

How Does This Affect Your Wallet?

If the contingency fund is insufficient, condo associations will issue a special assessment, meaning owners may have to pay thousands in unexpected fees.

• Example: A $15,000 per unit assessment for a roof replacement due to inadequate reserves.
• Monthly contributions are calculated based on each owner’s share of the building’s total value.
• A well-managed fund leads to predictable fees and fewer financial surprises.

Professional Insight

What to Look For in a Contingency Fund Study

1. Fund Adequacy – Does the fund contain at least 70-80% of the recommended amount?
2. Major Upcoming Expenses – Are there large repairs expected in the next 3-5 years?
3. Contribution Increases – Will monthly contributions rise significantly?
4. Study Currency – Was the last study completed within the last five years?

⚠️ Important: The contingency fund cannot be used for minor repairs, maintenance, or upgrades. Separate funds (e.g., administrative fund, self-insurance fund) cover those expenses.

Red Flags to Watch For

• Very low monthly fees compared to similar buildings
• Recent rapid increases in monthly fees
• Visible deferred maintenance (e.g., crumbling balconies, worn-out lobbies)
• Condo board reluctance to share financial records
• Multiple special assessments issued in recent years

If you notice these issues, proceed with caution before making an offer.

📍 Related: Top things to consider when buying a condo

Need Help Selling Your Home?

Every home has the right buyer—sometimes, it’s just about making the right adjustments.

If you have questions about why your home isn’t selling or want an expert’s opinion on market conditions in Quebec, reach out today!

📞 Call Peter Thompson: (438) 500-8344
📩 Email: peter@peterthompson.ca

🏡 About Peter Thompson

Peter Thompson is a Quebec real estate expert specializing in helping homeowners navigate complex market conditions. Contact him today for a personalized home sale strategy.

🔗 More Resources:

• Seller’s Declaration: What Every Quebec Homeowner Should Know
• Certificate of Location: What Every Quebec Homeowner Should Know

 

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Peter Thompson