What is the contribution of the co-owners for the contingency funds?
May 12th, 2022
The concept of a provident fund is no doubt familiar to you if you own a condominium. Indeed, this type of fund is dedicated to expenses relating to major repairs and replacements of the common portions of a building, in contrast, for example, to more general maintenance. Under no circumstances should this type of funds be used to pay for current expenses. The following article will try to answer your questions about provident funds and specially to inform you about the height of the contribution that must be made by each co-owner.
Assess contingency fund needs
Before getting to the heart of the matter, it is good to define how to assess the size of a provident fund. This type of fund is primarily used to meet realistic future needs in terms of major repairs. The board of directors of the co-ownership estimate the costs of major repairs and the replacement of common portions. Indeed, the syndicate of co-ownership has some obligations such as obtaining a study of the contingency fund which will establish the amounts necessary to have enough money to pay for major repairs or the replacement of the common parts. When a provident fund study is done, many elements must be considered. Once again, we are only talking about major repair work and the replacement of common portions over a period of 25 to 30 years.
The contribution of the co-owners
The annual contribution of the co-owners will be based on the study of the contingency fund. These forecasts will be confirmed or invalidated at the time of the plans, specifications and calls for tenders for the work. It should be noted that the syndicate must always make this study available to its co-owners. The contribution of the co-owners to the contingency fund is at least 5% of their contribution to common expenses. The respective rights of the co-owners to the common portions for restricted use may be considered for the establishment of these amounts. This study of the contingency fund must be reviewed every five years and must be carried out by a member of a professional order determined by government regulation. This regulation may also determine the content and terms of this study. It should also be noted that the board of directors must consult the meeting of co-owners before deciding on any special contribution, any additional investment that would not have been determined at the start. It is therefore better to make a good assessment from the start.
If you have any questions, do not hesitate to contact specialists in the field who can give you more information about the investment of each of the co-owners in a provident fund. The building inspection specialists who offer this type of service will always be happy to answer all your questions so that you can make the best choices.