Allocation of Common Area Expenses in Condominiums in Quebec: Understanding to Manage Better
The allocation of common expenses in a condominium is a critical yet often misunderstood topic. It determines who pays for what, how, and why. Misinterpretation or incorrect application can lead to tensions, budgeting errors, and even disputes.
This guide focuses on the Quebec context, explains the two main categories of expenses, the mechanics of allocation, and best practices for clear and fair management.
Condominium ownership is a specialized field where the terminology can sometimes be difficult to understand. Please refer to our glossary for definitions of certain terms to aid your understanding.
Table of Contents
The Legal Framework for the Allocation of Expenses
The allocation of expenses in a condominium is governed by several articles of the Civil Code of Québec (CCQ), primarily Articles 1064, 1071, and 1072.
Article 1064 CCQ
“Each co-owner contributes to the common expenses in proportion to the relative value of his fraction. However, only co-owners who have the use of common portions for restricted use contribute to the expenses related to the maintenance and the ordinary repairs of those portions.
The declaration of co-ownership may determine a different apportionment of the co-owners’ contribution to the expenses for major repairs to common portions for restricted use and for the replacement of those portions.”
Article 1071 CCQ
“The syndicate establishes, according to the estimated cost of major repairs and the cost of replacement of common portions, a contingency fund to be used exclusively for such repairs and replacement. The fund must be partly liquid and be available at short notice, and its capital must be guaranteed. The syndicate is the owner of the fund, and the fund’s use is determined by the board of directors.
The board of directors obtains a contingency fund study establishing the sums necessary for the fund to be sufficient to cover the estimated cost of major repairs and of replacement of common portions. The study is conducted in accordance with the standards established by a government regulation, which designates among other things the professional orders whose members are authorized to conduct such studies and determines the intervals at which a new study must be obtained by the board of directors. The standards may vary according to the characteristics of an immovable.
The sums to be paid into the contingency fund are fixed on the basis of the recommendations made in the contingency fund study and taking into account ongoing developments in the co-ownership, in particular the amounts available in the contingency fund.
Until the developer obtains the contingency fund study, the sums to be paid into the fund must correspond to 0.5% of the reconstruction cost of the immovable.”
Article 1072 CCQ
“Each year, the board of directors, after consultation with the general meeting of the co-owners, fixes their contribution for common expenses, which include the sums required to meet the expenses arising from the co-ownership and the operation of the immovable, and the amounts to be paid into the contingency fund and the self-insurance fund.
The Government determines, by regulation, the terms according to which the co-owners’ minimum contribution to the self-insurance fund is determined.
The syndicate, without delay, notifies each co-owner of the amount of his contribution and the date when it is payable.”
These provisions form the basis for transparent and equitable management of common expenses. However, their application often depends on the declaration of co-ownership, the founding document of any co-ownership.
The two main categories of expenses
There are two types of co-ownership expenses, managed independently: general common expenses and specific common expenses.
General common expenses
These expenses concern the entire building and all co-owners. They pertain to the common areas (CA) and are allocated according to the share of each unit, as provided for in Article 1064 of the CCQ.
Examples:
Maintenance of the roof and facades
Electricity for common areas
Building insurance
Management and administration fees
Contributions to the operating fund, self-insurance fund, and contingency fund
These expenses form the basis of the annual budget for the condominium.
Specific common expenses
These expenses apply only to certain co-owners and cover specific expenditures related to common areas with restricted use (CARU). They are divided into two subcategories:
a) Usage expenses
Routine maintenance and repairs (e.g., painting a balcony, snow removal from a parking lot).
These expenses are often charged to the operating fund or directly by the co-owners.
Even if not explicitly mentioned in the declaration of co-ownership, they should be allocated solely among the co-owners who have exclusive use of them, in accordance with Article 1064 of the CCQ.
An allocation formula is often required when the calculation is feasible and significantly useful.
b) Living expenses
Major repairs or replacements (e.g., replacement of balconies, windows).
These expenses are charged to the reserve fund (Article 1071 CCQ).
By default, they are allocated according to the share, unless the declaration provides for a different allocation based on the right of exclusive use.
In the absence of a specific clause, the general rule applies: all co-owners contribute according to their share.
Example:
When purchasing a condo, it is important to review these clauses, as you may be required to contribute to the replacement of a terrace that is for the exclusive use of another co-owner.
Declaration of Co-ownership
The Declaration of Co-ownership is the legal document that determines how expenses are allocated. In particular, it defines:
the private areas,
the common areas,
the common areas with restricted use (PCUR),
the share,
and the method of allocating expenses.
Declarations prior to 1994 are often imprecise, as the major reform of the Civil Code of Québec introduced new definitions and obligations. An update is therefore strongly recommended to avoid legal ambiguities.
Article coming soon on this topic!
The ownership share, the right of exclusive use, and the allocation formula
Some important concepts to understand when it comes to the allocation of expenses.
Ownership share
Each unit has an ownership share, determined when the condominium was established. It represents each co-owner’s percentage of ownership in the common areas and serves as the basis for calculating expenses and voting rights.
According to Article 1053 of the CCQ, the calculation method (size, location, nature, etc.) must be specified in the declaration. However, in older condominiums, this information is often missing, making the allocation confusing.
Allocation Formula
An allocation formula allows for adjusting the distribution of certain expenses to reflect actual use or specific benefits. It becomes essential whenever an expense does not affect all co-owners equally.
Examples:
Parking lot maintenance: only the affected co-owners
Garage maintenance: only owners of a garage space
Replacement of rooftop terraces: only affected co-owners
At the association’s request, co-owners may pay their contributions directly to the association so that it can plan and coordinate the work, thereby facilitating management. An allocation formula is then appliedfor usage charges.
For living expenses, these are either included in the share of common expenses, or the declaration provides for a different allocation.
Right of exclusive use
When an allocation formula is required, the method used generally relies on the right of exclusive use granted to certain co-owners. This right, defined in the declaration, allows for the use of a common area without transferring ownership (balcony, terrace, parking space, etc.).
Concrete example:
In a condominium with eight units, the declaration stipulates that expenses related to balconies (maintenance and replacement) are the responsibility of the co-owners who use them exclusively.
Thus, only the four units with balconies contribute to:
routine maintenance expenses (usage charges);
contributions to the reserve fund for future replacement (living charges).
This allocation method ensures fairness among co-owners, with each bearing the costs associated with the benefits they enjoy.
Identify the article stating that an allocation formula is required
This clause is generally found in Chapter 4 of the declaration of co-ownership, titled:
“Determination of the relative value, the share of expenses, the number of votes, and the share in the common areas pertaining to each unit.”
It is often worded as follows:
“Notwithstanding the foregoing, and where the calculation is possible and significantly useful, the common expenses resulting from the use of common areas with restricted use are allocated solely among the co-owners who use these common areas, in proportion to their exclusive rights of use. Furthermore, these co-owners are required, pursuant to Article 1072 of the Civil Code of Québec, to make a special and periodic contribution to the contingency fund to cover major repairs and the replacement of said common areas. In the event of insufficiency, a special contribution to the contingency fund may be requested by the syndicate.”
Or
“Common expenses for the use of common areas with restricted use
Where the calculation is possible and significantly useful, the common expenses resulting from the use of common areas with restricted use—namely, the routine maintenance and repair expenses for these areas,…—are allocated solely among the co-owners who use these common areas with restricted use. These charges are allocated among them in proportion to each co-owner’s exclusive rights of use, and thus based on usage…
Contingency Fund – Replacement of Common Areas with Restricted Use
Notwithstanding the foregoing, and where this declaration of co-ownership specifically provides for it, the respective rights of the co-owners over certain common areas with restricted use must be taken into account when determining the co-owners’ contributions to the contingency fund. Thus, all costs for major repairs or replacement… shall be allocated to the co-owner concerned. The co-owners may, pursuant to Article 1072 of the Civil Code of Québec, establish a special and periodic contribution to the contingency fund for major repairs and the replacement of these parts.”
When such a passage appears in the declaration, it constitutes an explicit clause providing for an allocation formula for specific common expenses (use and existence) related to common areas with restricted use (PCUR).
In some condominium declarations, there is a clause stating that expenses related to certain common areas with restricted use must be allocated according to an allocation formula, when the calculation is possible and significantly useful. This clarification is important. It means that the application of an allocation formula is not automatic in all situations. For example, in a condominium with 12 units where each co-owner owns a parking space, the declaration might stipulate that the costs of replacing parking spaces must be allocated according to exclusive use rights. However, since each co-owner owns exactly one parking space, applying an allocation formula would not be significantly useful, as everyone’s contribution would be identical. In this case, the expense can simply be allocated based on the ownership share or equally among the affected co-owners, without the need for a specific allocation formula. The primary purpose of this clause is to ensure equitable allocation when usage or benefits differ among co-owners.
Practical Application and Budget Monitoring
Establishing a precise and equitable allocation formula, as well as a clear understanding of the statement, requires a certain level of expertise.
Although ultimate responsibility lies with the board of directors, the assistance of a lawyer, notary, or CPA specializing in condominiums should be viewed as an investment, not as an expense.
To ensure rigorous financial management:
distinguish budget items by expense according to the applicable allocation formula;
track surpluses and deficits by budget item;
document decisions in the minutes.
Example:
If the budget item for terrace maintenance costs more than expected, only the affected co-owners should cover the deficit. Rigorous monitoring prevents injustices and internal tensions.
Free tool to download
To help you apply the concepts presented in this article in practice, Borée Professional Services provides you with a free Excel tool for allocating condominium expenses.
This tool allows you to:
Easily identify common areas (CA) and common areas with restricted use (CARU);
Apply allocation keys for usage and maintenance expenses;
Quickly view each co-owner’s fair contribution.
Download the free tool from our website: Download Tool
Role of Professionals
The professionals commissioned to conduct the studies required by Bill 16—namely the maintenance log and the reserve fund study—play a key role that goes beyond simple technical analysis.
They must have a thorough understanding of the legal principles of co-ownership in order to better guide the administrators and managers.
Their services include:
the identification of common areas and common areas with restricted use;
the analysis of the declaration of co-ownership to identify allocation clauses;
the recommendation of an allocation formula, if necessary, for living expenses.
This process does not replace the work of a professional, but it allows the association to then consult:
a lawyer or notary for legal validation;
a specialized CPA for accounting and budgetary oversight
At Borée Professional Services, we integrate this approach into each of our studies to ensure our clients have a clear understanding and seamless collaboration between technical, legal, and financial experts.
Recommended Best Practices
✅ Identify the common areas (CA) and common areas with restricted use (CARU) in the declaration
✅ Verify the presence and relevance of allocation keys for each type of expense
✅ Maintain a record of surpluses and deficits by budget item
✅ Ensure that provision fund studies specify the PCURs and the need for an allocation key
✅ Review old declarations (prior to 1994)
✅ Consult specialized professionals in case of doubt
Common mistakes to avoid
❌ Allocating all expenses based on the ownership share
❌ Failing to distinguish between operating and maintenance expenses
❌ Neglecting to apply an allocation formula for PCURs
❌ Having an undifferentiated overall budget
❌ Modifying the allocation without amending the declaration
Conclusion
The allocation of expenses is an essential pillar of managing a healthy, equitable condominium that complies with Quebec regulations. By mastering the different categories of expenses, verifying the statement, and applying the correct allocation formulas, administrators and managers ensure the sustainability of the property and harmony among co-owners.
Useful resources:
Carolane Gauthier
Co-founder
As an actuary and business development consultant, I help condominium associations optimize their operations and ensure regulatory compliance in Quebec.
