When acquiring a divided co-ownership, the buyer not only buys the unit but also part of the property’s common portions. The common portions are not divided equally; each co-owner buys a fraction in proportion to the value of their unit.
In a co-ownership, every co-owner is responsible for the property’s management and its maintenance. They manage the financial statements and ensure the proper management of the syndicate. Even though an administrator is responsible for the general management, every co-owner should have some basic knowledge on the subject and should be aware of the co-ownership’s financial health and the preservation of the property.
The Annual Budget
Each year, the annual budget, also known as the budget forecast, must be planned. Its purpose is to cover the expenses of the following twelve months, including the potential expenses. This document must include the necessary amounts to pay for current expenses and for the contributions to the contingency fund and the self-insurance fund.
The budget forecast must also include the expenses related to the common portions for restricted use; however, only the co-owners who use these portions pay these amounts. Moreover, the forecast will include the property’s statement of debts and account receivables.
The budget forecast determines each co-owner’s co-ownership fees and ensures that the expenses are divided fairly. The forecast must be presented and agreed upon by the co-owners during a general meeting.
The financial statements and the annual budget must be given to every co-owner during the annual meeting of the co-owners. This way, every co-owner can examine the documents, check the previous financial situation, and approve or disapprove the budget.
The Financial Statements
The syndicate’s financial statements must be made available to the co-owners. They include the year end balance sheet (which summarizes the year end account balances), the revenue and expense statements (which present the total for any given month), the financial performance, and the statement of variation of co-owners’ equity. Moreover, the co-owners should have access to the bank statements to check the co-ownership’s financial situation.
The law does not specify how the financial statements should be prepared or by who; however, some documents must be certified by a chartered professional accountant. They will review and verify the co-ownership’s accounting situation by outlining the assets and liabilities of the syndicate, the year-on-year comparison, the co-ownership’s financial performance, and the amounts that should be charged.
The Access to Financial Data by Buyers
According to the Civil Code of Québec, the syndicate should present certain documents to any potential co-owner, so they can make an informed decision. These documents revolve around the syndicate and the construction of the building.
Essentially, to make the purchase, the buyer must have access to the financial statements and the co-ownership’s budget. If they deem it necessary, the buyer can ask that the documents be verified by a qualified professional that they trust.
Dividing Co-Ownership Fees
Every co-owner must pay co-ownership fees, which include, among others, the amounts for the contingency fund. As we mentioned, these fees are presented during the annual meeting of the co-owners. These fees are used to pay for maintenance and preventative maintenance costs, and administrative expenses.
Each co-owner’s fees are proportional to the value of their fraction. The special common expenses, on the other hand, are for the common portions for restricted use. The balconies, terraces, and windows can be common portions for restricted use.
The Availability of Financial Statements
The syndicate of co-ownership can use software to send these documents and to manage the co-owners’ access more easily.
Thanks to co-ownership management software like Condo Expert, the co-owners can track costs and have access to debriefings of the previous meetings, account dashboards, and many other features.
Moreover, with the integrated accounting platform, one can categorize the users and manage the accesses, which means that the data can be available or not, as determined by the manager.
Furthermore, the users can access their data anywhere via a mobile phone, a tablet, or a laptop, and the manager can send notifications to the co-owners via text or email.
Thanks to Condo Expert, you can generate simplified reports, determine the statements of income and the cash flow, and organize your work routine. The software is tailored to the Canadian and Quebecois markets and includes government forms.