Here is a common problem at the time of the resale of a condo, either it’s the first sale after the initial one from the builder or not. Indeed, numerous sellers are remitting to me for their transaction a certificate of location made before the signature of the declaration of co-ownership.
The seller of an immovable in Québec must provide the purchaser with the certificate of location in their possession as per section 1709 of the Code civil du Québec. Condo builders generally don’t undertake to provide more than what they are obligated to by law. However, for a resale, the vendor must provide the purchaser with a certificate of location « showing the property in its actual state » in accordance with the offers to purchase in use (OACIQ, Duproprio, etc.). It also forms part of my duty to advise as a notary to inform the purchaser to this effect. Moreover, a certificate of location which is not up-to-date will not be acceptable for the mortgage lender of the purchaser, who may then refuse to proceed with the loan necessary for the purchase.
In the particular case of a condo, does the certificate of location show the actual state of the immovable is made before the declaration of co-ownership ? The answer is negative.
Indeed, as per section 1038 of the Code civil du Québec, the divided co-ownership (the condos) doesn’t exist until the declaration of co-ownership is signed. The certificate of location is accordingly made on a regular building, not on condos. Even if the land surveyor may have qualified parts of the building as common and private in his certificate of location, it’s only the declaration of co-ownership which can determine the qualification of each lot forming the co-ownership (common or private). The official deposit of the cadastral plans is not sufficient, the declaration of co-ownership must be signed and published for the certificate of location to relate it and to represent the actual state of the immovable.
The logic is the same if there are any modification to the declaration of co-ownership after the confection of the certificate of location : a new one will be required for the sale. Moreover, there is no distinction to make between a new condo (built by a builder) and a conversion (existing immovable converted into condos).
What would be the advantages of a new certificate of location for the purchaser ? It would inter alia permit to make sure the condo corresponds to the cadastral plans. The certificate of location dating before the declaration of co-ownership being generally made on the complete building instead of the apartment only as the new, the land surveyor often did not measured every apartments to verify the concordance of the measurements with the official plans. I thus discovered in a few files that the condo was bigger than the plans (ex : an empty space in a common area which the builder integrated as a locker in an apartment, ceilings higher than on the construction plans, missing beams, etc.).
Accordingly, I always make sure that the purchaser of a condo receives an up-to-date certificate of location showing no irregularities and this before the signature of the deed of sale. Because nobody wants to buy problems, it will then be possible to solve them in time !
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So, in the case of a new condo that was sold with the certificate of location being done before the Declaration of Co-ownership, that would mean that the certificate of location was never valid. Is the notary who completed the transaction then not liable for the cost of a valid certificate of location at the time that the condo is the resold by the owner?
This is an excellent question ! The answer resides in the agreement between the buyer and the vendor. Most often, the vendor is a Builder and has specified in the agreement that he will provide only the certificate of location he has in his possession. Then there could be no responsibility on the notary’s part.
In the case of a sale where there are irregularities between the certificate of location and the cadastral plans, what is an advisable procedure? I understand that the buyer may impose the cadastral plans be updated or have the seller provide title insurance. What are the differences and should you choose one over the other?
Indeed, a discrepancy between the reality and the cadastral plan requires a correction. Each situation is different and the advice will accordingly vary depending on the situation. We’ve done several transactions with title insurance and then modification of the declaration of co-ownership at the seller’s cost. It is important to understand that a title insurance is not a permanent solution nor correction. It only allows a transaction to go through despite the problem. It’s not transferable to a subsequent purchaser and it has to be renewed every time a mortage is taken on the property. That’s why we as notaries usually recommend that a proper correction be done, either by correcting the cadastral plans with everything that it involves depending on the case (modification of the declaration of co-ownership, transfers with the syndicate, etc.) or by a modification of the declaration of co-ownership to create new exclusive rights of use for example.