F.A.Q

An evaluation report provides an independent opinion on the value of a property. It represents the price at which the property should sell if it were to be placed on the open and competitive market.

The different types of evaluation reports depend on the intended purpose, that is, your needs.

Mortgage Financing or Refinancing: If it’s for obtaining financing, the evaluation report provides the financial institution with an independent opinion on the value of your property to establish your mortgage loan.

Buying/Selling: During a buying or selling transaction, an evaluation report on the property’s market value allows you to make an informed decision for placing an offer or developing your marketing strategy for selling the property.

Tax Purposes: There are several reasons to commission an evaluation report for tax purposes.

1. Change of Use – Primary Residence to Rental Property: When changing the use of your property (from primary residence to rental), it’s important to define the property’s market value accurately by a certified appraiser on the date of the change to protect the tax-free capital gain when selling the property. An evaluation report by a certified appraiser will be essential to present to tax authorities at the time of selling the property.

2. Asset Rollover: During an asset rollover, obtaining an evaluation report of the property’s market value on the rollover date is crucial for calculating the capital gain resulting from the presumed sale. This report will justify the capital gain to tax authorities.

3. Sales Between Related Persons: For sales between related persons, obtaining an evaluation report of the property’s market value on the sale date is important for calculating the capital gain from the sale. In such cases, the capital gain is calculated not on the sale price but on the property’s market value on the sale date. This report will justify to tax authorities that the capital gain was calculated based on the market value and not on a favorable sale price.

4. Estate: During property inheritance, obtaining an evaluation report of the property’s market value on the date of inheritance is important for calculating the capital gain from the presumed sale. This report will justify the capital gain to tax authorities.

5. Investment: To make an informed decision during a real estate project, an evaluation report is an indispensable tool in the decision-making process and obtaining project financing.

6. Construction/Renovation Project:

An evaluation report of the project’s POTENTIAL market value will indicate the estimated market value of your project once completed. The POTENTIAL market value will allow you to assess its potential profitability, justify the costs, and is essential when seeking financing from a bank or private lender.

7. Flip/Renovation Project:

An evaluation report of the property’s CURRENT value (before renovation) as well as the early project estimate of the POTENTIAL value (considered renovations completed) will allow you to assess its potential profitability, justify the costs, and is essential when seeking financing from a financial institution or private lender.

8. Progress Report on Work/Progress Payments:

For new construction, renovation, or flip projects, financial institutions release funds for the project based on the progress of work and predetermined milestone stages. An independent report on the progress of work at different construction stages will allow you to obtain the necessary funds for the project’s next stages.

9. Rent-to-Own:

An evaluation report of the property’s market value at the time of the transaction allows you to make an informed decision, ensuring that the property’s selling price at the end of the contract is based on a market value estimated by a certified appraiser with the skills to do so.

To estimate the rental value of your property: Rental value refers to the most likely rent you could obtain for leasing a residential unit in your residential building or condominium. This value ensures that you negotiate the lease at the market rate and maximize your property’s value. In the case of new construction, knowing the rental value of potential units will allow you to assess your project’s viability and potential profitability.

Insurance Coverage (Bill 141): An evaluation of the building’s replacement value will provide an estimate of the cost of rebuilding your building from scratch. This estimate ensures that your insurance coverage will cover the entire cost of reconstruction in case of a disaster.

Co-ownership – Contingency Fund Study (Bill16): This report presents an estimate, with a reasonable degree of accuracy, of the annual contributions to be made to the reserve fund to cover major work and replacement of common parts of the building that have reached the end of their useful life within the study’s horizon.

Co-ownership – Maintenance Logbook: A crucial document in co-ownership, the maintenance log serves as your syndicate’s dashboard, tracing the building’s history and all past or upcoming operations on the property. It enhances a co-ownership’s competitiveness in the resale market. Moreover, administrators who use it demonstrate a commitment to good governance and sound management.

The work of a Chartered Appraiser involves forming an objective opinion on the value of a property or real estate right at a given date. Biases, personal interests, and preferences are not part of their professional approach.

As a member of a professional order, they must adhere to practice standards and a code of ethics. They are also subject to inspections of their professional practice. Additionally, professional liability insurance provides extra recourse for their clientele.

Chartered Appraisers are engaged for their informed, reliable, and impartial opinions, making them invaluable real estate advisors.
A Chartered Appraiser must constantly update their knowledge through continuous education.

If the broker provides a generally quick analysis service, they do not provide an official report and do not put their professional liability at stake. The value expressed by a real estate broker is not impartial or independent, as the broker has a financial interest (commission or gaining you as a client).

In contrast to a real estate broker, the chartered appraiser has much more advanced training in appraisal, can assess the value of your property with a higher degree of accuracy. Moreover, their title is protected, and they provide you with a comprehensive and official appraisal report, which brokers do not. Additionally, the chartered appraiser is a member of the Ordre des Évaluateurs Agréés du Québec, and must adhere to professional practice standards and a code of ethics. According to this code, the chartered appraiser must be independent, impartial, and free from conflicts of interest.

Unlike values expressed by a real estate broker, reports from a chartered appraiser are accepted by financial institutions and governments.

Yes, chartered appraisers must adhere to professional practice standards. These professional practice standards from the Ordre des Évaluateurs Agréés du Québec are part of the best practices for the profession.

Aiming to ensure the quality and consistency of professional services, these standards specify the substance of acts recognized in the profession and the minimal content of reports prepared by appraisers.

The answer is “yes,” the appraiser is required to visit your property in order to conduct a proper physical survey and assess the condition and functional aspects of the property as of the evaluation date.

The visit forms the very foundation of an appraiser’s work and enables them to carry out a thorough and conscientious assessment, leading to a well-founded opinion of the property’s value.

The study of the Contingency Fund is conducted by a chartered appraiser who is a member of the Ordre des Évaluateurs Agréés du Québec. This study involves estimating, to a reasonable degree of accuracy, the annual contributions to be made to the Contingency Fund to address major repairs and replacements of common elements of the building that have reached the end of their useful life within the study period.

This study outlines major repair and replacement work of common elements over a 25-year period, as well as estimating the required annual contributions (according to various scenarios) to be deposited in the Contingency Fund to cover the costs of these works. These contributions are in addition to other assessments such as those for the operational management of the syndicate.

The study of the Contingency Fund is conducted in accordance with the professional practice standards of the Ordre des Évaluateurs Agréés du Québec and is inspired by the standard for Contingency Fund studies for condominiums in Quebec, published by the Regroupement des gestionnaires et copropriétaires du Québec (RGCQ).

The study of the Contingency Fund includes:

• Identification of the building

• Identification and inventory of common elements

• Identification of major replacement and repair work over a 25-year period

• Deadline for work to be done over a 25-year period (in the form of a table)

• Estimation of the costs of these works

• Recommendation of contributions to be made to the fund under different scenarios

Our delivery timelines are approximately 2 to 3 months.

All our Contingency Fund studies include an inspection of the common elements of the condominium. This inspection is carried out by a building inspector. The inspection report will be provided to you along with the Contingency Fund study and the Maintenance Log.

The visit to the condominium and the inspection report are conducted by one of our building inspectors.

The Contingency Fund study and the Maintenance Log will be conducted by one of our chartered appraisers, a member of the Ordre des Évaluateurs Agréés du Québec.

Not yet. Bill 16 provides that the Contingency Fund study will become mandatory following the adoption of a regulation. This regulation has not yet been adopted. When the regulation is adopted, existing condominiums will have 3 years to obtain their first study.

However, we are increasingly seeing cases where financial institutions refuse to finance the purchase of a condominium because the syndicate has not conducted a Contingency Fund study. The absence of a Contingency Fund study and the absence of a fund add significant financial risk to the financial institution, as there is a risk that special assessments may be levied by the syndicate for major work on the common elements of the condominium.

Benefits of obtaining a Contingency Fund study:

1. Compliance with the obligation of administrators to ensure sound management and good governance of the condominium.

2. Ensuring that the Contingency Fund is adequately funded to avoid special assessments.

3. Increasing the market value of condominium units.

There is no government accreditation system. Bill 16 stipulates that conducting Contingency Fund studies will be reserved for members of certain professional orders, which will be identified by the adoption of a regulation. This regulation has not yet been adopted. Therefore, no firm can claim to be “accredited” or “authorized.”

The professional orders will likely include orders in the field of real estate, such as members of the Ordre des Évaluateurs Agréés du Québec, architects, engineers, and professional technologists.

Our Contingency Fund studies are conducted by chartered appraisers who are members of the Ordre des Évaluateurs Agréés du Québec.

Furthermore, the Ordre des Évaluateurs Agréés du Québec has professional practice standards covering the conduct of Contingency Fund studies. These practice standards must be followed by chartered appraisers.

A report on the cost of new construction estimates the current value to rebuild the building in case of a disaster.

This report is necessary to ensure that the insurance coverage for your building is adequate and sufficient in case of a disaster.

Bill 141 requires condominium corporations to obtain a report on the cost of new construction for their condominium every 5 years.

According to the requirements stipulated in the first paragraph of Article 1073 of the Civil Code, only a member of the Professional Order of Chartered Appraisers of Quebec can be entrusted with assessing the amount that the insurance taken out by the condominium syndicate must provide for the reconstruction of the building owned in divided co-ownership.

Bill 141 requires condominium syndicates to insure their building.

The condominium syndicate must take out a replacement value insurance, meaning coverage for the actual cost of reconstruction. In other words, the insured amount must allow for the complete reconstruction of the building in case of total loss. Its current depreciation has no impact in this context.

This amount must be determined by a member of the Ordre des Évaluateurs Agréés du Québec and assessed at least every five years.

The insurance must cover the common elements and the private portions (excluding improvements made to them). This coverage will be taken out in the name of the syndicate, whose identity will be stated in the insurance policy.

As for improvements made to the private portions by co-owners, it is the responsibility of each co-owner to protect them with individual insurance, including those made by previous owners as well as their own.

Therefore, in order to identify what is covered by the syndicate and what must be covered by co-owners through their individual insurance, including improvements made by current and previous co-owners, the reference unit must be established.

Obligation of syndicates regarding the reference unit: “The syndicate must provide co-owners with a sufficiently precise description of the private portions so that the improvements made by co-owners can be identified. The same description can apply to multiple portions when they share the same characteristics.” This description, which will serve as the reference unit, must be recorded in the condominium register so that co-owners who request it can consult it.

The reference unit is an inventory summarizing the original finishing elements (excluding improvements made by current or previous co-owners) during the initial construction of the building. This document must be approved by the Board of Directors and ratified by the General Assembly.

All finishes purchased as options during the primary sale/purchase of the condominium project are considered improvements and must be excluded from the reference unit.

The reference unit pertains to the finishing elements of the private units and is not related to the area or the number of rooms in the units. This means that two units with different areas and different numbers of rooms but with identical or similar finishing elements will be described using the same reference unit.

Depending on the size of the condominium, a visit lasts approximately 30 minutes. We conduct an exterior and interior inspection of the common areas. At a minimum, we inspect one private unit.