Review and modification of the relative fractional values
Reviewing the relative value of fractions to ensure fairness and equity
Divided co-ownership is a system of ownership in which several owners legally share ownership and use of an immovable, with specific rights and responsibilities. This system is governed by rules that define the rights of owners in the fraction of the immovable that each owns, and how the value of each fraction is established. The right of co-owners to have the relative value of fractions reviewed is enshrined in the Civil Code of Québec, thus ensuring an equitable distribution of financial responsibilities and rights within the community.
In the context of divided co-ownership, it is essential that the relative values of fractions and the distribution of common expenses be fair and equitable. In order to quantify each owner's interest in the immovable, the legislator has established that each co-owner's right of ownership in the common portions is proportional to the relative value of his fraction. To determine this relative value, comparison with the value of all the fractions in the co-ownership is essential. This value is generally expressed as a percentage or in thousandths, and is specified in the declaration of co-ownership, the founding act of the co-ownership.
METHOD FOR ESTABLISHING RELATIVE VALUES
The Declaration of Co-ownership determines the relative value of each fraction and indicates the method used to calculate it, as outlined in Article 1053 of the Civil Code of Québec. The criteria and method of calculation must be mentioned in the Declaration of Co-ownership, although detailed calculations are not mandatory. The developer initially values each unit at a specific date, according to various criteria, to determine a theoretical market price. By comparing these theoretical prices, the relative values of the different fractions are calculated.
Article 1041 of the Civil Code of Québec specifies that the relative value of each fraction of a divided co-ownership is established by taking into account four criteria, independently of the use of the fraction:
- Nature: physical condition, quality of construction, materials used, etc.
- Destination: residential, commercial, etc.
- Dimensions: surface area and volume of the private portion.
- Location: location, sunlight, view, proximity to services.
This approach ensures that each owner has a fair share of the total value of the building, taking into account the variability of each unit.
REVIEW AND MODIFICATION OF RELATIVE FRACTIONAL VALUES
Any co-owner may apply to the court for a revision of the relative value of his fraction, under certain conditions. Article 1068 of the Civil Code of Québec allows co-owners to request a revision, for the future, of the relative value of fractions and the distribution of common expenses, within five years of the registration of the declaration of co-ownership in the land register. Once this deadline has passed, the appeal becomes inadmissible. For an appeal to be valid, the relative value attributed to a fraction or to the share of common charges relating to it must differ by at least one tenth, in favour of another co-owner, or to the detriment of the person making the claim.
There are other circumstances where the original relative values must be modified, or where a co-owner seeks to modify the relative value of his fraction. For example, the division of an apartment may lead to new relative values. Changes in value can also result from work carried out on a private portion, such as an extension. Depending on the circumstances, authorization from the general meeting of co-owners may be required.
A change in relative values also requires an amendment to the declaration of co-ownership, which must be approved by the general meeting of co-owners. Once approved, the amendment must be notarized and entered in the Land Register to take effect. It should be noted, however, that according to article 1102 of the Civil Code of Québec, the syndicate of co-owners is prohibited from modifying the relative value of a private portion without the consent of the co-owner concerned, and that any modification of the relative value which contradicts the declaration of co-ownership is invalid.
The relative value of a fraction in co-ownership is a fundamental element in establishing the rights and responsibilities of co-owners, and a modification can have significant consequences; it influences the share of ownership in the common portions, the number of votes at co-owners' meetings, the distribution of common expenses, the distribution of indemnities in the event of major loss, and collective obligations.
Before proposing any modifications, it is advisable to consult legal experts or co-ownership professionals, to ensure compliance with the law and avoid any future disputes.
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