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Friday August 1 2025

Summary of the insolvency of a co-owner in Quebec

The insolvency of a co-owner in Quebec is a complex situation that can have significant repercussions for the condominium syndicate. In this blog post, we will explore the legal implications and possible solutions for the syndicate when faced with this issue.

THE SYNDICATE’S CLAIMS IN THE EVENT OF PERSONAL BANKRUPTCY

When a co-owner declares bankruptcy, unpaid sums become ordinary unsecured claims. This means that the syndicate must file a proof of claim with the bankruptcy trustee in order to recover part of the amounts owed. However, it is important to note that there is no legal priority for these claims, unless they are covered by the right of pursuit.

THE RIGHT OF PURSUIT ON COMMON EXPENSES

The Civil Code of Québec offers special protection to the syndicate through the right of pursuit. This right allows unpaid common expenses to be deducted directly from the sale price of the private unit, whether by the mortgagee or the trustee in bankruptcy. To maximize this recovery, the syndicate must amend its claim if part of the debt is recovered at the time of sale.

COMMERCIAL BANKRUPTCY AND SEIZURE OF RENT

In the event that a company that owns commercial units goes bankrupt, the syndicate has the option of asking the bankruptcy trustee to seize the rent collected. This measure allows condo fees to be covered without waiting for the complete liquidation of assets.

OTHER EXPENSES NOT RELATED TO COMMON CHARGES

Expenses that are not directly related to common charges must also be subject to proof of claim. At the end of the bankruptcy proceedings, the syndicate will receive a portion of the available assets according to the distribution plan established by the trustee.

In conclusion, the insolvency of a co-owner in Quebec poses legal and financial challenges for the condominium syndicate. By understanding mechanisms such as the right of pursuit and claim procedures, the syndicate can better prepare to manage these complex situations.

Robert Barrette
Managing Director