Contingency Fund Study: What Every Quebec Homeowner Should Know

Written by

Peter Thompson

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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?

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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
đŸ“© 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.

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