New provisions in the Cooperatives Act (CQLR, c C-67.2)

On October 1, 2015, new provisions of the Cooperatives Act came into force. The new provisions affect housing cooperatives for which a building was built, acquired, restored or renovated under a housing assistance program of the Quebec government, the federal government or one of their departments, agencies or bodies.  

The purpose of the new requirements is to ensure that housing cooperatives maintain the sound management practices currently provided for under operating agreements.

Section 221.2.3 of the act now imposes the following 5 requirements:

• Building inspection by an expert 

For a building to remain in good condition in the long term, it is important to know its current condition and monitor changes over time. To ensure a thorough examination of the state of a building, an inspection is required at least every 5 years. The inspection should be performed by an expert, i.e. a member of one of the following organizations:

• The Québec Association of Building Inspectors;
• The National Building Inspectors and Experts Association;
• The Ordre des architectes du Québec;
• The Ordre des ingénieurs du Québec; 
• The Ordre des technologues professionnel du Québec.

• Five-year building maintenance and preservation plan 

The inspection report, which must be presented at the general meeting, will help define the work to be done, determine its scope and develop a plan based on an established timetable. Accordingly, a 5-year maintenance and preservation plan, including the related budget, must be prepared.

• Sufficient reserve 

Through planning, the funds needed to maintain and preserve buildings can be forecast. Cooperatives must be able to assume these costs which, in some cases, can be significant. Therefore, each cooperative is required to set up a sufficient reserve to have the funds needed to ensure its sound management and sustainability.

• Report on the work done

Cooperatives have a duty to report to members on their sound and prudent management. Since building management is a core component of their activities, cooperatives are now required to report on the following:

• the date of the last building inspection (in the next annual report);
• the date of the last building inspection, the maintenance and preservation work done during the fiscal year and the budget related to the five-year plan (in subsequent annual reports).

• Professional audit

To ensure the accuracy of the financial statements presented to members, cooperatives must appoint an auditor who is a member of the Ordre des comptables professionnels agréés du Québec. 

The new requirements of the Cooperatives Act are a reflection of the best management practices already implemented by housing cooperatives which, driven by cooperative values, wish to impart a stock of affordable and sustainable cooperative housing to future generations.

Any person who contravenes the provisions is guilty of an offence and is liable to penal proceedings. Therefore, all housing cooperative directors should ensure that their cooperative complies with the requirements.