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Saturday April 4 2026

CONTINGENCY FUND: CONDOMINIUMS THAT ARE UNDERFINANCED WITHOUT ANYBODY’S KNOWLEDGE ?

In Quebec condominiums, a subtle yet troubling trend is gaining momentum: the politicization of the contingency fund.

With Bill 16, the legislature’s intent was clear: to make this tool a mechanism for long-term planning, ensuring the sustainability of buildings without imposing financial shocks on co-owners.

In practice, however, its implementation raises certain questions.

ELECTION PROMISES… AT THE EXPENSE OF THE BUILDING’S FINANCES

Boards of directors are elected. And as in any electoral context, financial decisions can sometimes be influenced by short-term considerations: limiting increases, postponing certain projects, easing immediate pressure.

Yet, a building does not negotiate with time.

Components age, infrastructure deteriorates, and deferred costs do not disappear—they accumulate.

What appears to be a saving today may become a significant burden tomorrow.

THE SILENT PROBLEM: STUDIES… THAT AREN’T ALWAYS COMPARABLE

Added to this challenge is a more technical, yet equally critical, dimension: the assumptions used in contingency fund studies are not consistent across professionals.

Inflation, component lifespans, rates of return, and whether certain work is included or excluded: these parameters can vary from one expert to another, with significant impacts on the results.

Thus, for the same building, recommendations may differ significantly, without it always being easy for co-owners to understand the reasons why.

This variability raises questions of transparency and comparability.

It may also lead some boards of directors to favor, consciously or unconsciously, the least restrictive scenarios in the short term.

AN ILLUSION OF SOUND MANAGEMENT

The most concerning aspect is that this new approach—where one believes oneself to be protected by studies of the contingency fund—could create a false sense of security.

Although a condominium may appear to be well-managed, it could in reality be accumulating an invisible deficit. A liability that does not always appear clearly… until the day it becomes impossible to ignore.

TOWARD A COMMON AND TRANSPARENT FRAMEWORK

In this context, the issue of standardizing practices becomes central.

Many industry stakeholders believe that a framework of common assumptions could improve the clarity of studies and facilitate comparisons between buildings.

Without diminishing the role of professional judgment, such an approach would help limit discrepancies in interpretation and would allow for:

greater comparability between buildings
clearer reporting for buyers and co-owners
a reduction in opportunistic abuses
and, above all, increased confidence in the studies produced

A NECESSARY TRANSITION

By 2028, all co-ownership syndicates in Quebec will be required to maintain a maintenance log and a contingency fund study.

This stricter requirement imposed by Bill 16 and its implementing regulations was necessary to improve the management of the assets. However, we must follow this logic through to its conclusion: the reports must be useful in guiding directors in their work and must enable potential buyers to effectively compare properties.

Hence the need for a more structured framework that proposes common assumptions and leads to a single financing scenario.

CHOOSING REALITY OVER COMFORT

For a director, saying that an increase in condo fees is necessary is never popular, especially not with his neighbors. Planning major renovations is no more popular. However, this is precisely where the quality of governance comes into play.

Maintenance logs and contingency fund studies must serve to protect assets, and to do so, we must facilitate sound decision-making in buildings through well-conducted studies.

Without standardizing practices, Bill 16 risks creating an illusion of rigor… while allowing for new forms of underfunding.

Elise Beauchesne, CPA, Adm.A
Founding Partner