B-1.1, r. 8 - Regulation respecting the guarantee plan for new residential buildings

Updated to 1 September 2012

This document has official status.

chapter B-1.1, r. 8

Regulation respecting the guarantee plan for new residential buildings

Building Act

(chapter B-1.1, ss. 185 and 192).

CHAPTER I INTERPRETATION AND APPLICATION

DIVISION I INTERPRETATION

1. In this Regulation, unless the context indicates otherwise,

“accountant” means a member of the professional order of accountants specified in Schedule I to the Professional Code (chapter C-26) who is authorized, under the Act constituting that order, to practise the professional accounting activity required by the application of a provision of this Regulation; (comptable)

“actuary” means a Fellow of the Canadian Institute of Actuaries; (actuaire)

“approved plan” means a guarantee plan meeting the standards and criteria established by this Regulation and approved by the Régie du bâtiment du Québec; (plan approuvé)

“beneficiary” means a person, a partnership, an association, a non-profit organization or a cooperative that enters into a contract with a contractor for the sale or construction of a new residential building and, in the case of the common portions of a building held in divided co-ownership, the syndicate of co-owners; (bénéficiaire)

“building” means the building itself, including the installations and equipment necessary for its use, specifically, the artesian well, connections with municipal or government services, the septic tank and its absorption field and the subsoil drain; (bâtiment)

“building professional” means an architect, an engineer or a technologist who is a member of a professional order and is trained in the field of engineering or construction; (professionnel du bâtiment)

“contractor” means a person holding a general contractor’s licence authorizing him to carry out or have carried out, in whole or in part, for a beneficiary, construction work on a new residential building governed by this Regulation; (entrepreneur)

“manager” means a legal person authorized by the Board to manage a guarantee plan, or a provisional manager designated by the Board under section 83 of the Building Act (chapter B-1.1). (administrateur)

O.C. 841-98, s. 1.

DIVISION II APPLICATION

2. This Regulation applies to guarantee plans guaranteeing the performance of the contractor’s legal and contractual obligations provided for in Chapter II and resulting from a contract entered into with a beneficiary for the sale or construction of

(1)  the following new buildings intended mainly for residential purposes and not held in divided co-ownership by the beneficiary of the guarantee:

(a)  a detached, semi-detached or row-type single-family dwelling;

(b)  a multifamily building, from a duplex to a quintuplex;

(c)  a multifamily building comprising more than 5 dwelling units and held by a non-profit organization or a cooperative;

(2)  the following new buildings intended mainly for residential purposes and held in divided co-ownership by the beneficiary of the guarantee:

(a)  a detached, semi-detached or row-type single-family dwelling;

(b)  a multifamily building of combustible construction;

(c)  a multifamily building of noncombustible construction comprising no more than 4 private portions stacked one above the other;

(3)  the buildings specified in subparagraphs 1 or 2 and acquired by the contractor from a syndic, municipality or mortgage lender.

For the purposes of this Regulation, the terms “combustible construction” and “noncombustible construction” have the meaning given to them in the National Building Code–Canada 1995 (NRCC 38726E) including the revisions of July 1998 and November 1999 issued by the Canadian Commission on Building and Fire Codes of the National Research Council of Canada.

The intended use of a building is established on the date of conclusion of the contract and is presumed valid for the term of the guarantee. The guarantee applies to the entire building.

O.C. 841-98, s. 2; O.C. 920-2001, s. 1.

3. Any guarantee plan to which this Regulation applies shall meet the standards and criteria established herein and shall be approved by the Board.

O.C. 841-98, s. 3.

4. No change may be made to an approved plan unless the change meets the standards and criteria established by this Regulation.

O.C. 841-98, s. 4.

5. Any provision of a guarantee plan which is irreconcilable with this Regulation is invalid.

O.C. 841-98, s. 5.

CHAPTER II MINIMUM GUARANTEE

DIVISION I GUARANTEE AND REQUIRED MEMBERSHIP

6. Any person wishing to become a contractor for the new residential buildings referred to in section 2 shall, in accordance with Division I of Chapter IV, join a plan guaranteeing the performance of the legal and contractual obligations provided for in section 7 and resulting from a contract entered into with a beneficiary.

O.C. 841-98, s. 6.

DIVISION II CONTENT OF THE GUARANTEE

7. The guarantee plan shall guarantee the performance of the contractor’s legal and contractual obligations to the extent and in the manner prescribed by this Division.

O.C. 841-98, s. 7.

§ 1 . — Guarantee for Buildings Not Held in Divided Co-ownership

I.  Coverage of the Guarantee

8. For the purposes of this Subdivision, unless the context indicates otherwise,

“acceptance of the building” means the act whereby the beneficiary declares that he accepts the building which is ready to be used for its intended purpose and which indicates any work to be completed or corrected; (réception du bâtiment)

“completion of the work” means completion of the work related to the building and provided for in the original contract entered into between the beneficiary and the contractor, and completion of the additional work agreed to in writing between the parties; (parachèvement des travaux)

“end of the work” means the date on which all the contractor’s work agreed upon in writing with the beneficiary and related to the building is completed and the building is ready to be used for its intended purpose. (fin des travaux)

O.C. 841-98, s. 8.

9. The guarantee of a plan, where the contractor fails to perform his legal or contractual obligations before the acceptance of the building, shall cover,

(1)  in the case of a contract of sale,

(a)  either the partial payments by the beneficiary; or

(b)  completion of the work, where the beneficiary holds the ownership titles and where an agreement to that effect is entered into with the manager;

(2)  in the case of contract of enterprise,

(a)  either the partial payments by the beneficiary, provided that no unjustified profit for the latter results therefrom; or

(b)  completion of the work, where an agreement to that effect is reached with the manager; and

(3)  the relocation, moving and storage of the beneficiary’s property where,

(a)  the beneficiary is unable to declare acceptance of the building on the date agreed upon with the contractor, unless the partial payments are reimbursed; or

(b)  the beneficiary is unable to declare acceptance of the building on the date agreed upon with the contractor so that the manager may complete the building.

O.C. 841-98, s. 9.

10. The guarantee of a plan, where the contractor fails to perform his legal or contractual obligations after acceptance of the building, shall cover

(1)  completion of the work related to the building, notice of which is given in writing at the time of acceptance or, so long as the beneficiary has not moved in, within 3 days following acceptance;

(2)  repairs to apparent defects or poor workmanship as described in article 2111 of the Civil Code, notice of which is given in writing at the time of acceptance or, so long as the beneficiary has not moved in, within 3 days following acceptance;

(3)  repairs to non-apparent poor workmanship existing at the time of acceptance or discovered within 1 year after acceptance as provided for in articles 2113 and 2120 of the Civil Code, and notice of which is given to the contractor and to the manager in writing within a reasonable time not to exceed 6 months following the discovery of the poor workmanship;

(4)  repairs to latent defects within the meaning of article 1726 or 2103 of the Civil Code which are discovered within 3 years following acceptance of the building, and notice of which is given to the contractor and to the manager in writing within a reasonable time not to exceed 6 months following the discovery of the latent defects within the meaning of article 1739 of the Civil Code; and

(5)  repairs to faulty design, construction or production of the work, or the unfavourable nature of the ground within the meaning of article 2118 of the Civil Code, which appears within 5 years following the end of the work, and notice of which is given to the contractor and to the manager in writing within a reasonable time not to exceed 6 months after the discovery or occurrence of the defect or, in the case of gradual defects or vices, after their first manifestation.

O.C. 841-98, s. 10; O.C. 39-2006, s. 1.

11. Where the manager intervenes to complete or correct work related to a building, the beneficiary shall have any sum still owing kept by his financial institution or pay such sum into a trust account with an advocate, a notary or the manager of the plan for the final payment of the work that will be carried out by the manager to complete or correct the work provided for in the original contract or the additional work provided for in any written agreement entered into with the contractor.

O.C. 841-98, s. 11.

II.  Exclusions from the Guarantee

12. The guarantee excludes

(1)  repairs to defects in the materials and equipment supplied and installed by the beneficiary;

(2)  repairs made necessary by normal behaviour of materials, such as cracks or shrinkage;

(3)  repairs made necessary by a fault of the beneficiary, such as inadequate maintenance or misuse of the building, as well as by alterations, deletions or additions made by the beneficiary;

(4)  deterioration brought about by normal wear and tear;

(5)  the obligation to relocate, move or store the beneficiary’s property and repairs made necessary following an event of force majeure, such as an earthquake, a flood, exceptional climatic conditions, a strike or a lock-out;

(6)  repairs to damage resulting from the contractor’s extra-contractual civil liability;

(7)  repairs to damage resulting from contaminated soil, and replacement of the soil itself;

(8)  the obligation of a public utility to supply the building with natural gas or electricity;

(9)  parking areas or storage rooms located outside the building containing the dwelling units, and any works located outside the building such as swimming pools, earthwork, sidewalks, driveways or surface water drainage systems;

(10)  promises of a vendor concerning costs for use or energy consumption of appliances, systems or equipment included in the construction of a building, and

(11)  claims from the persons who contributed to the construction of the building.

However, the exclusions as provided for in subparagraphs 2 and 5 of the first paragraph do not apply if the contractor failed to comply with accepted practice or with a standard in force applicable to the building.

O.C. 841-98, s. 12; O.C. 39-2006, s. 2.

III.  Limits of the Guarantee

13. The guarantee of a plan for a detached, semi-detached or row-type single-family dwelling is limited per address to,

(1)  for partial payments, $39,000;

(2)  for coverage for relocation, moving and storage of the beneficiary’s property, upon the presentation of vouchers and provided that no unjustified profit for the beneficiary results therefrom, $5,500 as follows:

(a)  reimbursement of reasonable actual costs incurred for moving and storage;

(b)  reimbursement of reasonable actual costs incurred for relocation, including meals and accommodation, without exceeding, on a daily basis:

— for 1 person: $85;

— for 2 persons: $110;

— for 3 persons: $140;

— for 4 persons or more: $170;

(3)  for completion and repair of defects and poor workmanship, the amount entered in the contract of enterprise or contract of sale, without ever exceeding $260,000; and

(4)  for coverage for the obligation to supply water, both in quantity and quality, in the event that repairs are impossible, the amount of the damages suffered by the beneficiary, without ever exceeding the lesser of the 2 amounts mentioned in paragraph 3; coverage applies in the case of a contract of enterprise, provided that the obligation is included in the contract entered into between the beneficiary and the contractor.

O.C. 841-98, s. 13; O.C. 39-2006, s. 3.

14. The guarantee of a plan for a multifamily building is limited to,

(1)  for partial payments, $39,000 per building;

(2)  for coverage for relocation, moving and storage of the beneficiary’s property, upon the presentation of vouchers and provided that no unjustified profit for the beneficiary results therefrom, $5,500 per building, as follows:

(a)  reimbursement of reasonable actual costs incurred for moving and storage;

(b)  reimbursement of reasonable actual costs incurred for relocation, including meals and accommodation, without exceeding, on a daily basis:

— for 1 person: $85;

— for 2 persons: $110;

— for 3 persons: $140;

— for 4 persons or more: $170;

(3)  for completion and repair of defects and poor workmanship, the lesser of

(a)  the amount entered in the contract of enterprise or contract of sale; or

(b)  an amount equal to $130,000 multiplied by the number of dwelling units contained in the building, without ever exceeding $1,900,000; and

(4)  for coverage for the obligation to supply water, both in quantity and quality, in the event that repairs are impossible, the amount of the damages suffered by the beneficiary, without ever exceeding the lesser of the 2 amounts mentioned in paragraph 3; coverage applies in the case of a contract of enterprise, provided that the obligation is included in the contract entered into between the beneficiary and the contractor.

O.C. 841-98, s. 14; O.C. 39-2006, s. 4.

15. The guarantee of a plan applies to a building that has no beneficiary at the end of the work, provided that acceptance of the building occurs within 24 months after the end of the work.

The guarantee pertaining to faulty design, construction or production of the work, or the unfavourable nature of the ground within the meaning of article 2118 of the Civil Code is nevertheless limited to the remaining term of the guarantee.

The guarantee of completion after acceptance of the building does not apply, however, if the beneficiary and the contractor agree that the building is sold in the state of completion it has attained at the date of the contract.

O.C. 841-98, s. 15.

16. The guarantee of a plan benefits any subsequent purchaser for the remaining term of the guarantee.

O.C. 841-98, s. 16.

IV.  Implementation of the Guarantee

17. Each building covered by a guarantee shall be inspected before it is accepted. The contractor and the beneficiary shall carry out the inspection together, using a pre-established list of items to be checked. Such list shall be supplied by the manager and shall be adapted to the class of building concerned. The beneficiary may be assisted by a person of his choice.

The inspection shall be deferred where acceptance of the building takes place after the end of the work.

O.C. 841-98, s. 17.

17.1. Any claim based on the guarantee referred to in section 9 is subject to the following procedure:

(1)  not later than within 90 days following acceptance of the building, the beneficiary shall send to the contractor, by registered mail, a claim for reimbursement of expenses relating to relocation, moving and storage of the beneficiary’s property, along with vouchers. If the claim has not been settled within 15 days after the claim has been sent, the beneficiary shall notify the manager in writing who must decide the claim within 15 days following receipt of the notice;

(2)  for the implementation of the advance payment guarantee or guarantee of completion before acceptance of the building, the beneficiary shall send the claim in writing to the contractor and a copy of the claim to the manager. The procedure described in paragraphs 2 to 6 of section 18 applies to the claim with the necessary modifications.

For the purposes of subparagraph 2 of the first paragraph, the beneficiary shall pay fees to the manager in the amount of $100 which will be reimbursed to the beneficiary on the conditions prescribed for reimbursement of the fees referred to in paragraph 2 of section 18.

O.C. 39-2006, s. 5.

18. Any claim based on the guarantee referred to in section 10 is subject to the following procedure:

(1)  within the guarantee period of 1, 3 or 5 years, as the case may be, the beneficiary shall give notice to the contractor in writing of the construction defect found and send a copy of that notice to the manager in order to suspend the prescription;

(2)  at least 15 days after notice by the beneficiary has been sent, the beneficiary shall notify the manager in writing if he is dissatisfied with the contractor’s intervention or if the contractor has failed to intervene; he shall pay to the manager fees in the amount of $100 for opening the file. Those fees are reimbursed to him if the decision rendered is in his favour, in whole or in part, or if an agreement is entered into between the parties concerned;

(3)  within 15 days after receipt of the notice prescribed in paragraph 2, the manager shall ask the contractor to intervene and to inform him, within 15 days, of the measures he intends to take to remedy the situation concerning which the beneficiary has given notice;

(4)  within 15 days after the expiry of the period granted to the contractor under paragraph 3, the manager shall carry out an inspection on the premises;

(5)  within 20 days following the inspection, the manager shall file a detailed written report stating whether or not the matter has been settled and send a copy by registered mail to the parties concerned. If the claim has not been settled, the manager shall decide the claim and order, as applicable, the contractor to reimburse to the beneficiary the cost of necessary and urgent conservatory repairs, or to complete or correct the work within the period the manager indicates and agreed upon with the beneficiary;

(6)  where the contractor fails to reimburse the beneficiary or to complete or correct the work and there is no recourse to mediation or the manager’s decision is not contested in arbitration by one of the parties, the manager shall, within 15 days after the expiry of the period agreed upon with the beneficiary under paragraph 5, make the reimbursement or take charge of completing or correcting the work, agree to a time period for doing so with the beneficiary and undertake, if applicable, the preparation of corrective specifications and a call for tenders, choose contractors and supervise the work;

(7)  (paragraph replaced).

O.C. 841-98, s. 18; O.C. 39-2006, s. 6.

V.  Remedy

19. A beneficiary or contractor who is dissatisfied with a decision of the manager shall, in order for the guarantee to apply, submit the dispute to arbitration within 30 days following receipt by registered mail of the manager’s decision, unless the beneficiary and contractor agree to submit the dispute, within the same period, to a mediator chosen from a list established by the Minister of Labour in order to try and reach an agreement. In that case, the deadline to submit the dispute to arbitration is 30 days following receipt by registered mail of the mediator’s advice concluding to the partial or total failure of the mediation.

O.C. 841-98, s. 19; O.C. 39-2006, s. 7.

19.1. Failure by the beneficiary to file a claim or implement the guarantee in timely fashion cannot be set up against the beneficiary if the contractor or manager fails to perform the obligations under sections 17, 17.1, 18, 66, 69.1, 132 to 137 and paragraphs 12, 13, 14 and 18 of Schedule II, unless the contractor or manager shows that such failure had no incidence on the failure to file a claim in timely fashion or that the time for filing the claim or implementing the guarantee has been expired for more than one year.

O.C. 39-2006, s. 8.

20. The beneficiary, the contractor and the manager are bound by the arbitration decision as soon as it is rendered by the arbitrator.

The arbitrator’s decision is final and not subject to appeal.

O.C. 841-98, s. 20.

21. Arbitration fees are shared equally between the manager and the contractor where the latter is the plaintiff.

Where the plaintiff is the beneficiary, those fees are charged to the manager, unless the beneficiary fails to obtain a favourable decision on any of the elements of his claim, in which case the arbitrator shall split the costs.

O.C. 841-98, s. 21.

22. Where applicable, the arbitrator shall decide on the amount of reasonable fees for a relevant expert’s report to be reimbursed to the plaintiff by the manager, where the plaintiff wins the case in whole or in part.

O.C. 841-98, s. 22.

23. The expenses incurred by the beneficiary, contractor and manager for the arbitration are borne by each one of them.

O.C. 841-98, s. 23.

24. A manager who compensates a beneficiary under this Subdivision is subrogated in his rights up to and including the sums he has paid.

O.C. 841-98, s. 24.

§ 2 . — Guarantee for Buildings Held in Divided Co-ownership

I.  Coverage of the Guarantee

25. For the purposes of this Subdivision, unless the context indicates otherwise,

“acceptance of the common portions” means the act, with a copy sent to each known beneficiary, the syndicate and the contractor, whereby a building professional chosen by the syndicate of co-owners declares the date of the end of the work on the common portions, subject to minor work indicated by the building professional as remaining to be completed. The acceptance takes place following receipt of a notice of the end of work sent by the contractor to each known beneficiary and to the syndicate of co-owners; (réception des parties communes)

“acceptance of the private portion” means the act whereby the beneficiary declares that he accepts the private portion which is ready to be used for its intended purpose and on which some work is to be completed or corrected, where applicable; (réception de la partie privative)

“common portions” means those that are part of the building and that are listed in the constituting act of co-ownership or, in the absence of specific provisions in that act, those listed in article 1044 of the Civil Code; (parties communes)

“completion of the work” means completion of the work related to the building and provided for in the original contract entered into between the beneficiary and the contractor, and completion of the additional work agreed to in writing between the parties; (parachèvement des travaux)

“end of the work on the common portions” means the date on which all the contractor’s work agreed upon in writing with the beneficiary and pertaining to the common portions is completed and the building is ready to be used for its intended purpose; (fin des travaux des parties communes)

“end of the work on the private portions” means the date on which all the contractor’s work agreed upon in writing with the beneficiary and pertaining to his private portion is completed or, at the latest, the date of the end of the work on the common portions. (fins des travaux des parties privatives)

O.C. 841-98, s. 25; O.C. 39-2006, s. 9.

25.1. For the purposes of this Subdivision, acceptance is deemed to have taken place not later than 6 months after receipt of the notice of the end of work if the following conditions are met:

(1)  the work is completed;

(2)  the syndicate is formed and is no longer under the control of the contractor;

(3)  the notice of the end of work sent to the syndicate by the contractor informed the syndicate of the end of the work and obligations with respect to acceptance; and

(4)  six months have elapsed since the receipt of the notice by the syndicate and the latter, without reason, did not accept the common portions.

O.C. 39-2006, s. 10.

26. The guarantee of a plan, where the contractor fails to perform his legal or contractual obligations before acceptance of the private portion or the common portions, shall cover,

(1)  in the case of a contract of sale,

(a)  either the partial payments by the beneficiary; or

(b)  completion of the work, where the beneficiary holds the ownership titles and where an agreement to that effect is entered into with the manager;

(2)  in the case of a contract of enterprise,

(a)  either the partial payments by the beneficiary, provided that no unjustified profit for the latter results therefrom; or

(b)  completion of the work, where an agreement to that effect is reached with the manager; and

(3)  the relocation, moving and storage of the beneficiary’s property where

(a)  the beneficiary is unable to declare acceptance of the building on the date agreed upon with the contractor, unless the partial payments are reimbursed; or

(b)  the beneficiary is unable to declare acceptance of the building on the date agreed upon with the contractor so that the manager may complete the building.

O.C. 841-98, s. 26.

27. The guarantee of a plan, where the contractor fails to perform his legal or contractual obligations after acceptance of the private portion or the common portions, shall cover

(1)  completion of the work, notice of which is given in writing

(a)  by the beneficiary, at the time of acceptance of the private portion or, so long as the beneficiary has not moved in, within 3 days following acceptance; and

(b)  by the building professional, at the time of acceptance of the common portions;

(2)  repairs to apparent defects or poor workmanship as described in article 2111 of the Civil Code, notice of which is given in writing at the time of acceptance or, so long as the beneficiary has not moved in, within 3 days following acceptance;

(3)  repairs to non-apparent poor workmanship existing at the time of acceptance and discovered within 1 year after acceptance as provided for in articles 2113 and 2120 of the Civil Code, and notice of which is given to the contractor and to the manager in writing within a reasonable time not to exceed 6 months following the discovery of the poor workmanship;

(4)  repairs to latent defects within the meaning of article 1726 or 2103 of the Civil Code which are discovered within 3 years following acceptance, and notice of which is given to the contractor and to the manager in writing within a reasonable time not to exceed 6 months following the discovery of the latent defects within the meaning of article 1739 of the Civil Code; and

(5)  repairs to faulty design, construction or production of the work, or the unfavourable nature of the ground within the meaning of article 2118 of the Civil Code, which appear within 5 years following the end of the work on the common portions or, where there are no common portions forming part of the building, the private portion, and notice of which is given to the contractor and to the manager in writing within a reasonable time not to exceed 6 months after the discovery or occurrence of the defect or, in the case of gradual defects or vices, after their first manifestation.

O.C. 841-98, s. 27; O.C. 39-2006, s. 11.

28. Where the manager intervenes to complete or correct work related to a building, the beneficiary shall have any sum still owing kept by his financial institution or pay such sum into a trust account with an advocate, a notary or the manager of the plan for the final payment of the work that will be carried out by the manager to complete or correct the work provided for in the original contract or the additional work provided for in any written agreement entered into with the contractor.

O.C. 841-98, s. 28.

II.  Exclusions from the Guarantee

29. The guarantee excludes

(1)  repairs to defects in the materials and equipment supplied and installed by the beneficiary;

(2)  repairs made necessary by normal behaviour of materials, such as cracks or shrinkage;

(3)  repairs made necessary by a fault of the beneficiary such as inadequate maintenance or misuse of the building, as well as alterations, deletions or additions made by the beneficiary;

(4)  deterioration brought about by normal wear and tear;

(5)  the obligation to relocate, move or store the beneficiary’s property and repairs made necessary following an event of force majeure, such as an earthquake, a flood, exceptional climatic conditions, a strike or a lock-out;

(6)  repairs to damage resulting from the contractor’s extra-contractual civil liability;

(7)  repairs to damage resulting from contaminated soil, including replacement of the soil itself;

(8)  the obligation of a public utility to supply the building with natural gas or electricity;

(9)  parking areas or storage rooms located outside the building containing the dwelling units, and any works outside the building such as swimming pools, earthwork, sidewalks, driveways or surface water drainage systems;

(10)  promises of a vendor concerning costs for use or energy consumption of appliances, systems or equipment included in the construction of a building; and

(11)  claims from the persons who contributed to the construction of the building.

However, the exclusions as provided for in subparagraphs 2 and 5 of the first paragraph do not apply if the contractor failed to comply with accepted practice or with a standard in force applicable to the building.

O.C. 841-98, s. 29; O.C. 39-2006, s. 12.

III.  Limits of the Guarantee

30. The guarantee of a plan for a building held in divided co-ownership is limited to,

(1)  for partial payments, $39,000 per fraction provided for in the declaration of co-ownership;

(2)  for coverage for relocation, moving and storage of the beneficiary’s property, on presentation of vouchers and provided that no unjustified profit for the beneficiary results therefrom, $5,500 per fraction provided for in the declaration of co-ownership, as follows:

(a)  reimbursement of reasonable actual costs incurred for moving and storage;

(b)  reimbursement of reasonable actual costs incurred for relocation, including meals and accommodation, without exceeding, on a daily basis:

— for 1 person: $85;

— for 2 persons: $110;

— for 3 persons: $140;

— for 4 persons or more: $170;

(3)  for completion and repair of defects and poor workmanship to a detached, semi-detached or row-type single-family dwelling, the amount entered in the contract of enterprise or in the contract of sale, without ever exceeding $260,000 per housing unit and $2,600,000 for all the housing units provided for in the declaration of co-ownership, provided that the units comprise common portions forming part of the building;

(4)  for completion and repair of defects and poor workmanship to a multifamily building, the lesser of

(a)  the total amount of the purchase price of the fractions contained in the building or the total amount entered in the contract of enterprise;

(b)  an amount equal to $130,000 multiplied by the number of private portions contained in the building, without exceeding $2,600,000 per building; or

(5)  for coverage for the obligation to supply water, both in quantity and quality, in the event that repairs are impossible, the amount of the damages suffered by the beneficiary, without ever exceeding the lesser of the 2 amounts mentioned in paragraph 3; coverage applies in the case of a contract of enterprise, provided that the obligation is included in the contract entered into between the beneficiary and the contractor.

O.C. 841-98, s. 30; O.C. 39-2006, s. 13.

31. The guarantee of a plan applies to a private portion that has no beneficiary at the end of the work on the common portions, provided that acceptance of the private portion occurs within 24 months after the end of the work.

The guarantee pertaining to faulty design, construction or production of the work, or the unfavourable nature of the ground within the meaning of article 2118 of the Civil Code is nevertheless limited to the remaining term of the guarantee.

The guarantee of completion after acceptance of the private portion does not apply, however, if the beneficiary and the contractor agree that the private portion is sold in the state of completion it has attained at the date of the contract.

O.C. 841-98, s. 31.

32. The guarantee of a plan benefits any subsequent purchaser of the remaining term of the guarantee.

O.C. 841-98, s. 32.

IV.  Implementation of the Guarantee

33. Each private portion covered by the guarantee shall be inspected before it is accepted. The contractor and the beneficiary shall carry out the inspection together, using a pre-established list of items to be checked. Such list shall be supplied by the manager. The beneficiary may be assisted by a person of his choice.

The inspection shall be deferred where acceptance of the private portion takes place after the end of the work on the common portions.

The common portions covered by the guarantee shall be inspected before they are accepted. The contractor, the building professional chosen by the syndicate of co-owners and the latter shall carry out the inspection using a pre-established list of items to be checked. Such list shall be supplied by the manager.

O.C. 841-98, s. 33.

33.1. Any claim based on the guarantee referred to in section 26 is subject to the following procedure:

(1)  not later than within 90 days following acceptance of the building, the beneficiary shall send to the contractor, by registered mail, a claim for reimbursement of expenses relating to relocation, moving and storage of the beneficiary’s property, along with vouchers. If the claim has not been settled within 15 days after the claim has been sent, the beneficiary shall notify the manager in writing who must decide the claim within 15 days following receipt of the notice;

(2)  for the implementation of the advance payment guarantee or guarantee of completion before acceptance of the building, the beneficiary shall send the claim in writing to the contractor and a copy of the claim to the manager. The procedure described in paragraphs 2 to 6 of section 34 applies to the claim with the necessary modifications.

For the purposes of subparagraph 2 of the first paragraph, the beneficiary shall pay fees to the manager in the amount of $100 which will be reimbursed to the beneficiary on the conditions prescribed for reimbursement of the fees referred to in paragraph 2 of section 34.

O.C. 39-2006, s. 14.

34. Any claim based on the guarantee referred to in section 27 is subject to the following procedure:

(1)  within the guarantee period of 1, 3 or 5 years, as the case may be, the beneficiary shall give notice to the contractor in writing of the construction defect found and send a copy of that notice to the manager in order to suspend the prescription;

(2)  at least 15 days after notice by the beneficiary has been sent, the beneficiary shall notify the manager in writing if he is unsatisfied with the contractor’s intervention or if the contractor has failed to intervene; he shall pay to the manager fees in the amount of $100 for opening the file. Those fees shall be reimbursed to him if the decision to be rendered is in his favour, in whole or in part, or if an agreement is entered into between the parties concerned;

(3)  within 15 days after receipt of the notice prescribed in paragraph 2, the manager shall ask the contractor to intervene and to inform him, within 15 days, of the measures he intends to take to remedy the situation concerning which the beneficiary has given notice;

(4)  within 15 days after the expiry of the period granted to the contractor in paragraph 3, the manager shall carry out an inspection on the premises;

(5)  within 20 days following the inspection, the manager shall file a detailed written report stating whether or not the matter has been settled and send a copy by registered mail to the parties concerned. If the claim has not been settled, the manager shall decide the claim and order, as applicable, the contractor to reimburse to the beneficiary the cost of necessary and urgent conservatory repairs, or to complete or correct the work within the period the manager indicates and agreed upon with the beneficiary;

(6)  where the contractor fails to reimburse the beneficiary or to complete or correct the work and there is no recourse to mediation or the manager’s decision is not contested in arbitration by one of the parties, the manager shall, within 15 days after the expiry of the period agreed upon with the beneficiary under paragraph 5, make the reimbursement or take charge of completing or correcting the work, agree to a time period for doing so with the beneficiary and undertake, if applicable, the preparation of corrective specifications and a call for tenders, choose contractors and supervise the work;

(7)  (paragraph replaced).

O.C. 841-98, s. 34; O.C. 39-2006, s. 15.

V.  Remedy

35. A beneficiary or contractor who is dissatisfied with a decision of the manager shall, in order for the guarantee to apply, submit the dispute to arbitration within 30 days following receipt by registered mail of the manager’s decision, unless the beneficiary and contractor agree to submit the dispute, within the same period, to a mediator chosen from a list established by the Minister of Labour in order to try and reach an agreement. In that case, the deadline to submit the dispute to arbitration is 30 days following receipt by registered mail of the mediator’s advice concluding to the partial or total failure of the mediation.

O.C. 841-98, s. 35; O.C. 39-2006, s. 16.

35.1. Failure by the beneficiary to file a claim or implement the guarantee in timely fashion cannot be set up against the beneficiary if the contractor or manager fails to perform the obligations under sections 33, 33.1, 34, 66, 69.1, 132 to 137 and paragraphs 12, 13, 14 and 18 of Schedule II, unless the contractor or manager shows that such failure had no incidence on the failure to file a claim in timely fashion or that the time for filing the claim or implementing the guarantee has been expired for more than one year.

O.C. 39-2006, s. 17.

36. The beneficiary, contractor and manager are bound by the decision as soon as it is rendered by the arbitrator.

The arbitrator’s decision is final and not subject to appeal.

O.C. 841-98, s. 36.

37. Arbitration fees are shared equally between the manager and the contractor where the latter is the plaintiff.

Where the plaintiff is the beneficiary, those fees are charged to the manager, unless the beneficiary fails to obtain a favourable decision on any of the elements of his claim, in which case the arbitrator shall split the costs.

O.C. 841-98, s. 37.

38. Where applicable, the arbitrator shall decide on the amount of reasonable fees for a relevant expert’s report to be reimbursed to the plaintiff by the manager, where the plaintiff wins the case in whole or in part.

O.C. 841-98, s. 38.

39. The expenses incurred by the beneficiary, contractor and manager are borne by each one of them.

O.C. 841-98, s. 39.

40. A manager who compensates a beneficiary under this Subdivision is subrogated in his rights up to and including the sums he has paid.

O.C. 841-98, s. 40.

CHAPTER III MANAGER OF THE GUARANTEE PLAN

DIVISION I QUALIFICATIONS REQUIRED OF THE MANAGER

41. Only a person having the status of legal person whose sole purpose is to manage financial guarantees within the meaning of Chapter V of the Building Act (chapter B-1.1) may obtain authorization from the Board to manage an approved plan.

O.C. 841-98, s. 41.

42. Authorization from the Board is granted to a legal person meeting the following conditions:

(1)  none of its officers lends his name to another person;

(2)  where applicable, it has been discharged if it was declared bankrupt less than 3 years ago;

(3)  it has not been issued a winding-up order;

(4)  neither it nor any of its officers has, in the 5 years preceding the application, been convicted of an indictable offence triable only on indictment and connected with the business of manager, unless it or he has obtained a pardon;

(5)  none of its officers has been an officer of a partnership or legal person which has, in the 5 years preceding the application, been convicted of an indictable offence triable only on indictment and connected with the business of manager, unless it or he has obtained a pardon;

(6)  none of its officers was an officer of a partnership or legal person in the 12 months preceding the latter’s bankruptcy occurring less than 3 years ago;

(7)  none of its officers has been an officer of a manager whose authorization by the Board was withdrawn less than 3 years ago under section 83 of the Building Act (chapter B-1.1);

(8)  its organizational structure provides that its officers and key personnel participating in policy decision-making and application of the guarantee plan are recruited from among persons who, because of their activities, are capable of contributing in a particular manner to the administration of a guarantee plan, and that at least 3 of those persons have experience in the financial institutions sector, in government and in the consumer affairs sector and are recruited from among persons proposed by the most representative consumer associations. The representatives are to be chosen from a list drawn up by the Board. The term of the representatives from the financial institutions sector, the government and the consumer affairs sector is of not less than one year and may be renewed;

(9)  its internal by-laws concerning conflict of interest in particular and applying to persons acting within its organization structure are equivalent to the rules set out in articles 1310 and following of the Civil Code. Those rules stipulate, among other things, that no contractor may have access, at any time, to personal information of a fiscal nature or to other information contained in the file of a peer; and

(10)  its fiscal year is the calendar year.

O.C. 841-98, s. 42; O.C. 39-2006, s. 18.

DIVISION II CONDITIONS TO BE FULFILLED BY THE MANAGER

§ 1 . — Documents and Information

43. A legal person applying for authorization to manage an approved plan shall supply the Board with

(1)  its name, the address of its principal establishment and, where applicable, the number of the declaration of registration deposited in the enterprise register, as well as the name, address of domicile, date of birth, social insurance number and telephone number of all its officers and of the person responsible for its operations in Québec, where applicable;

(2)  information concerning its legal structure, a certified true copy of its deed of incorporation and any amendments thereto;

(3)  any judgment delivered against it or any of its officers, in the 5 years preceding the application, for an indictable offence triable only on indictment and connected with the business of manager, unless it or he has obtained a pardon;

(4)  2 copies of its guarantee plan and of its guarantee contract;

(5)  the security prescribed in section 58, a certificate of insurance coverage required under section 62 or any other equivalent guarantee, and a certified true copy of the text of any insurance or equivalent guarantee prescribed in section 47, in the second paragraph of section 48 and in section 63;

(6)  the inspection program and the pre-established list of items to be checked, provided for in sections 68 and 69;

(7)  for the first 3 years of operation, a business plan as defined in the “Dictionnaire de la comptabilité et de la gestion financière”, by L. Ménard et al., Canadian Institute of Chartered Accountants, Ordre des experts comptables-France, Institut des Réviseurs d’Entreprises-Belgique, 1994;

(8)  a copy of its internal by-laws; and

(9)  financial forecasts prepared in accordance with generally accepted accounting principles and audited in accordance with generally accepted auditing standards, including an actuary’s opinion on the assumptions used in their preparation.

It shall also supply the Board with a statement signed by an officer generally or specifically authorized for that purpose certifying

(1)  that the officer is filing the application for authorization on behalf of the legal person;

(2)  that neither the legal person nor any of its officers is in any of the situations specified in paragraph 2, 3, 4, 5, 6 or 7 of section 42, where applicable; and

(3)  that the legal person undertakes to pay, before the beginning of its operations, the contribution indicated in section 47.

O.C. 841-98, s. 43.

§ 2 . — Management

44. Except in the case of a legal person constituted for the sole purpose of managing an approved plan, the manager shall manage the approved plan separately from his other business and, in particular, keep separate accounts and bank transactions.

O.C. 841-98, s. 44.

45. For that purpose, the manager shall post separately and identifiably, in the financial statements of the approved plan, the portion of his general or other expenses allotted to the approved plan.

O.C. 841-98, s. 45.

46. Subject to section 49, any sum received by the manager in consideration of a guarantee contract and the income generated by those sums shall be deposited in separate bank accounts or be invested in bonds or other debt securities issued or guaranteed by Québec, Canada or a province of Canada, the United States of America or any of its member states, the International Bank for Reconstruction and Development, a municipality or a school board in Canada or a fabrique in Québec, or in deposit accounts or deposit certificates of a financial institution for a term not to exceed 5 years.

O.C. 841-98, s. 46.

§ 3 . — Solvency

47. The manager shall, before the beginning of his operations, pay a contribution of $1,500,000. If he undertakes to obtain and to keep in force additional insurance or any other equivalent guarantee of at least $1,000,000 over and above the reserve account, the contribution that he shall pay is $500,000.

A contribution paid in cash shall be deposited in a separate bank account or be invested in one of the forms provided for in section 46.

O.C. 841-98, s. 47.

48. The manager shall maintain an excess amount of assets over liabilities at least equal to the higher of the following amounts:

(1)  the contribution provided for in section 47; or

(2)  the aggregate of

(a)  the amount obtained by multiplying the provision for outstanding claims provided for in section 56 by 15%; and

(b)  the amount obtained by multiplying the reserve provided for in section 54 and the additional reserve provided for in section 56 by 15%.

The percentage of 15% referred to in clauses a and b of subparagraph 2 of the first paragraph shall be reduced to 5% if the manager holds additional insurance or any other equivalent guarantee of at least $1,000,000 over and above the reserve account or of 10% of that account, covering the obligations that he assumes for the duration of the coverage provided by the guarantee certificate already obtained.

The minimum excess amount required under this section may be used only for the purposes of the approved plan.

O.C. 841-98, s. 48.

49. The manager shall keep, at all times, in a separate trust account called “reserve account”, sums or investments sufficient to guarantee the obligations resulting from the approved plan.

O.C. 841-98, s. 49.

50. For that purpose, the manager shall immediately deposit in the reserve account, according to the classes of buildings concerned, the amounts indicated in the table appearing in Schedule I. Those amounts shall in no case be less than 60% of any sum received in consideration of a guarantee certificate issued under the approved plan.

O.C. 841-98, s. 50.

51. The reserve account may be used by the manager only for one of the following purposes:

(1)  to pay a claim originating from a guarantee certificate issued under the approved plan for which a sum was deposited in that account under section 50;

(2)  to reimburse the sums due to the contractor following the cancellation of a guarantee certificate for which a sum was deposited in that account under section 50;

(3)  to pay the external claims settlement costs related to a claim originating from a guarantee certificate for which a sum was deposited in that account under section 50; or

(4)  to pay the internal claims settlement costs directly related to a claim originating from a guarantee certificate for which a sum was deposited in that account under section 50.

However, where, at the end of each fiscal year, the reserve account exceeds the actuarial reserve referred to in section 56, the excess amount may be used by the manager for other purposes than those specified in the first paragraph.

O.C. 841-98, s. 51.

52. Where the reserve account is entrusted to a depositary in the form of a deposit, the term and other conditions are determined in accordance with the agreement between the manager and the depositary. The term agreed upon may not, however, exceed 5 years.

O.C. 841-98, s. 52.

53. Where the depositary of the reserve account is a trust company, the manager may also choose the investments to be made with those funds. In that case, the funds may be invested only by the trust company and only in bonds or other debt securities issued or guaranteed by Québec, Canada or a province of Canada, the United States of America or any of its member states, the International Bank for Reconstruction and Development, a municipality or a school board in Canada or a fabrique in Québec, or in deposit accounts or deposit certificates of a financial institution for a term not to exceed 5 years.

All income from the reserve account shall be paid at least annually.

O.C. 841-98, s. 53.

54. The minimum reserve to be kept at the end of each of the manager’s fiscal years in the reserve account shall never be less than the following percentages of the reserve provided for in section 50, based on the time elapsed since the issue of the guarantee certificate:

Time elapsed since the issue of guarantee certificate:

Percentage

(1)  less than 1 year: 95%;

(2)  1 year or more but less than 2 years: 85%;

(3)  2 years or more but less than 3 years: 75%;

(4)  3 years or more but less than 4 years: 65%;

(5)  4 years or more but less than 5 years: 50%;

(6)  5 years or more but less than 6 years: 25%;

(7)  6 years or more: 0%.

O.C. 841-98, s. 54.

55. The reserve account, including the assets held in respect of the provisions referred to in section 56, are non-transferable and non-seizable.

O.C. 841-98, s. 55.

56. The manager and his actuary shall ensure that they establish an actuarial reserve consisting of the minimum reserve referred to in section 54, of an additional reserve over and above that minimum reserve where the actuary is of the opinion that the minimum reserve does not constitute a good and sufficient provision to guarantee the obligations resulting from the guarantee certificate issued by the manager, and of a good and sufficient provision for outstanding claims, which are claims submitted and not settled and claims incurred but not reported.

O.C. 841-98, s. 56.

57. The manager shall, where applicable, deposit in the reserve account an additional sum equal to the difference between the actuarial reserve and the amount of the reserve account.

O.C. 841-98, s. 57.

§ 4 . — Security

58. The manager shall furnish security in the amount of $50,000.

O.C. 841-98, s. 58.

59. The security may, among other things, be in cash or in bonds or other debt securities issued or guaranteed by Québec, Canada or a province of Canada, the United States of America or any of its member states, a municipality or a school board in Québec.

O.C. 841-98, s. 59.

60. The security shall be kept by the Board, either to compensate the beneficiaries of the approved plan where the manager or his insurer fails to perform the obligations resulting from the plan, or to reinsure the obligations of the plan where the interest of the beneficiaries so requires.

However, interest on the security shall remain payable to the manager or shall be credited to the manager.

O.C. 841-98, s. 60.

61. The manager may withdraw or replace the bonds and other debt securities making up his security, provided that the security remains in compliance with this Regulation.

O.C. 841-98, s. 61.

§ 5 . — Insurance

62. The manager shall obtain and keep in force insurance or any other equivalent guarantee to cover the obligations he assumes during the entire duration of coverage of the guarantee certificates, and shall send confirmation thereof to the Board.

O.C. 841-98, s. 62.

63. The manager shall file with the Board a true copy of the text of any insurance or equivalent guarantee invoked to reduce in any way the amount of the contribution established in accordance with this Regulation. The insurance or the equivalent guarantee shall be acceptable to the Board.

O.C. 841-98, s. 63.

§ 6 . — Annual Report

64. The manager shall, no later than 4 months after the end of each fiscal year, supply the Board with an annual report of the approved plan stating its situation.

The annual report shall include financial statements for the plan’s latest fiscal year, financial statements that shall be prepared in accordance with generally accepted accounting principles and audited in accordance with generally accepted auditing standards.

The annual report shall also be accompanied by experience data sent on a form supplied by the Board.

The annual report shall also include the actuary’s report and the changes made during the fiscal year to the guarantee plan and to the guarantee contract.

The actuarial reserve appearing in the financial statements shall be certified by an actuary to the effect that it constitutes a provision which is good and sufficient to guarantee the obligations resulting from the guarantee certificates issued by the manager. Otherwise, the financial statements shall indicate which amount should be deposited in the reserve account in order to constitute a provision which is good and sufficient, in accordance with the actuary’s report certifying that it was calculated on the basis of adequate assumptions with regard to the manager’s financial situation and the contracts he concludes.

Every 3 years, the annual report shall also include, for the following 3 years of operation, a business plan as defined in the Dictionnaire de la comptabilité et de la gestion financière by L. Ménard et al, Canadian Institute of Chartered Accountants, Ordre des experts comptables-France, Institut des Réviseurs d’Entreprises-Belgique, 1994.

O.C. 841-98, s. 64.

65. Where the funds accumulated in the reserve account represent an amount less than that which is declared to constitute a good and sufficient provision by the actuary’s certificate, the manager shall, before filing the financial statements of the approved plan, deposit in the reserve account a sum equal to the difference.

O.C. 841-98, s. 65.

§ 7 . — Other conditions

66. Any decision by the manager to refuse or cancel a contractor’s membership in the approved plan or concerning a claim made by a beneficiary shall be in writing and give reasons therefor.

The decision must contain the following:

(1)  in the case of a decision on a claim made by a beneficiary, mention that it is the decision of the manager, the names of the beneficiary and the contractor, the address of the building concerned, the date of each inspection, if any, the date of the final decision, the remedies and time limits prescribed by the regulation and the names and addresses of the arbitration bodies authorized by the Board as well as those of the Ministère du Travail so that the list of accredited mediators may be obtained;

(2)  in the case of a decision refusing or cancelling a contractor’s membership in the approved plan, the date of the decision and the remedies and time limits prescribed by the regulation and the names and addresses of the arbitration bodies authorized by the Board.

O.C. 841-98, s. 66; O.C. 39-2006, s. 19.

67. The manager is subject to the arbitration procedure determined by this Regulation where the contractor contests a decision by the manager to refuse or cancel his membership in the approved plan, or where a person contests a decision of the manager concerning a claim.

He shall also, without delay, send to the arbitration body the file on the decision that is subject to arbitration.

O.C. 841-98, s. 67.

68. The manager shall, to ensure implementation of the approved plan, establish and obtain approval for an inspection program including the various steps in construction of a building and taking into account, in particular, the experience of the contractors, the nature of the construction projects and the categories of the buildings concerned.

O.C. 841-98, s. 68.

69. The manager shall supply each contractor with a list of items to be checked for each class of building, approved by the Board for the purposes of the inspection prior to acceptance.

O.C. 841-98, s. 69; O.C. 39-2006, s. 20.

69.1. Upon receipt of a building registration application from the beneficiary or as soon as the beneficiary is known, the manager shall send to the beneficiary the explanatory document prepared by the Board on the application of this Regulation.

O.C. 39-2006, s. 21.

70. The manager shall immediately send to the Board any information which could call into question the issue, validity or renewal of a contractor’s licence.

O.C. 841-98, s. 70.

71. The manager shall ensure that the contractors receive training with regard to the content of the approved plan and the contract resulting therefrom.

O.C. 841-98, s. 71.

72. The manager shall draw up and keep updated a register indicating, for each contractor, the class of building covered by the guarantee, the address of the construction site and the arbitration awards concerning the contractor.

The register is public and may be consulted free of charge during the manager’s business hours.

The manager shall issue to any person who so requests a copy or an excerpt of the register, in consideration of expenses not exceeding the cost of its reproduction and transmission.

O.C. 841-98, s. 72.

73. The manager shall, with regard to the confidentiality of information communicated to him by such persons as contractors, bankers or consumers, comply with the Act respecting the protection of personal information in the private sector (chapter P-39.1).

On the beneficiary’s request, the manager shall provide access to the file concerning the beneficiary’s building which may include, among other things, reports concerning inspection, intervention, observed defects and remedies thereto, plans and specifications, experts’ opinions used for the manager’s report and other similar documents.

O.C. 841-98, s. 73.

74. For the purposes of this Regulation, the manager shall, where the contractor is absent or fails to intervene, assume each and every obligation of the contractor within the scope of the approved plan.

O.C. 841-98, s. 74.

CHAPTER IV STANDARDS AND CRITERIA OF GUARANTEE PLANS AND OF GUARANTEE CONTRACTS

75. In addition to the guarantee requirements set out in Chapter II, the guarantee plan shall include the standards and criteria prescribed in Divisions I, II and III of this Chapter.

O.C. 841-98, s. 75.

76. No guarantee contract may be offered unless it complies with the rules established in Division IV of this Chapter and is approved by the Board.

O.C. 841-98, s. 76.

77. No change may be made to a guarantee contract unless the change complies with the rules established in Division IV of this Chapter.

O.C. 841-98, s. 77.

77.1. The publicity for a guarantee plan must clearly distinguish between the compulsory guarantee plan and any other guarantee plan and mention that the compulsory plan is approved by the Régie du bâtiment du Québec and that it ensures financial protection in respect of part of the contractor’s legal and contractual obligations.

O.C. 39-2006, s. 22.

DIVISION I MEMBERSHIP OF THE CONTRACTOR

78. To join a guarantee plan and obtain a certificate of accreditation, a person shall

(1)  complete an application for membership on the form supplied by the manager and return the form to the manager;

(2)  satisfy the conditions and financial criteria prescribed in this Division;

(3)  sign the membership agreement supplied by the manager and setting forth the obligations listed in Schedule II;

(4)  hold security in the amount of $20,000 against fraud, embezzlement or misappropriation of funds;

(5)  submit complete financial statements audited or accompanied by a review engagement report and drawn up by an accountant. Those statements shall be dated and signed by a person in authority. In addition, financial statements shall be dated no later than 4 months after the end of the undertaking’s fiscal year;

(6)  produce a document certifying that the shareholders holding 20% or more of the voting shares, officers and guarantors have been discharged from any personal bankruptcy and have not been involved in the bankruptcy of a construction firm for at least 3 years and state whether one of the other shareholders was involved in such a bankruptcy in less than 3 years;

(7)  produce the personal balance sheet of each officer, shareholder, guarantor and partner, duly completed, dated and signed;

(8)  declare all his obligations towards third parties and towards affiliates or other companies, such as a legal hypothec or security towards third parties;

(9)  produce a certified true copy of the deed of incorporation of his undertaking;

(10)  pay the membership fees required by the manager; and

(11)  produce a document certifying that he has applied to the Board for a contractor’s licence;

(12)  if that person, one of its shareholders holding 20% or more of the voting shares or one of its officers was accredited for the last 3 years by another manager, produce a statement of that manager stating whether sums are owed by the applicant undertaking, one of its shareholders holding 20% or more of the voting shares or one of its officers.

O.C. 841-98, s. 78; O.C. 39-2006, s. 23.

79. The manager shall be notified of the amalgamation, sale or assignment of a partnership or legal person, or of a change to its name, board of directors or officers within 30 days of the event.

O.C. 841-98, s. 79.

80. The manager shall issue a certificate of accreditation if the conditions prescribed in this Chapter are met.

O.C. 841-98, s. 80.

81. The manager shall remain the owner of the certificate of accreditation.

The holder of a certificate shall not transfer it.

O.C. 841-98, s. 81.

82. The holder of a valid certificate of accreditation shall display that certificate in a conspicuous place at his principal establishment in Québec.

O.C. 841-98, s. 82.

83. The holder of a certificate of accreditation who ceases to be entitled thereto shall notify the manager thereof in writing within 30 days following the date on which his entitlement ends.

O.C. 841-98, s. 83.

§ 1 . — General Membership Conditions for All Buildings

I.  Type A Undertaking (An undertaking working, in whole or in part, in the construction of residential buildings for less than 4 years).

84. Such an undertaking shall

(1)  hold security of a minimum value of $35,000 in the form of

(a)  a personal security;

(b)  a letter of guarantee from a bank;

(c)  a hypothecary guarantee; or

(d)  security of a third person; and

(2)  meet the following financial criteria, where it is possible to calculate them:

(a)  working capital ratio: 1.15;

(b)  debt/equity ratio: 80%;

(c)  net worth (10% of sales): 10%;

(d)  gross earnings: 18%;

(e)  net earnings: 5%.

All the above financial criteria shall be calculated using the average obtained over the last 3 years.

Where an undertaking possesses affiliates or related companies, the manager may require a consolidated balance sheet or financial statements from each of those companies.

In this Subdivision, the financial criteria shall have the meaning given to them in the Dictionnaire de la comptabilité et de la gestion financière by L. Ménard et al., Canadian Institute of Chartered Accountants, Ordre des experts comptables-France, Institut des Réviseurs d’Entreprises-Belgique, 1994.

O.C. 841-98, s. 84; O.C. 39-2006, s. 24.

II.  Type B Undertaking (An undertaking working, in whole or in part, in the construction of residential buildings for not less than 4 years).

85. Such an undertaking shall

(1)  hold security of a minimum value of $40,000 in the form of

(a)  personal security;

(b)  a letter of guarantee;

(c)  a hypothecary guarantee; or

(d)  security of a third person; and

(2)  meet the following financial criteria:

(a)  working capital ratio: 1.15;

(b)  debt/equity ratio: 80%;

(c)  net worth (10% of sales): 10%;

(d)  gross earnings: 18%;

(e)  net earnings: 5%.

All the above financial criteria shall be calculated using the average obtained over the last 3 years.

Where an undertaking possesses affiliates or related companies, the manager may require a consolidated balance sheet or financial statements from each of those companies.

O.C. 841-98, s. 85.

§ 2 . — Additional Membership Conditions for Multifamily Buildings Not Held in Divided Co-ownership and Comprising More than 5 Dwelling Units

86. An undertaking planning to work on multifamily buildings not held in divided co-ownership and comprising more than 5 dwelling units shall also supply the manager with

(1)  a certificate of financing;

(2)  plans of architecture, structure, mechanics and electricity with a seal and approved by the municipality;

(3)  a complete ground analysis;

(4)  a follow-up and a certificate of conformity by recognized professionals;

(5)  a copy of the building permit issued by the municipality; and

(6)  a copy of the preliminary contracts.

O.C. 841-98, s. 86.

§ 3 . — Additional Membership Conditions for Multifamily Buildings Held in Divided Co-ownership of More than 5 Private Portions

O.C. 841-98, Sd. 3; O.C. 920-2001, s. 2.

87. An undertaking planning to work on multifamily buildings held in divided co-ownership of more than 5 private portions shall also supply the manager with

(1)  a certificate of financing;

(2)  plans of architecture, structure, mechanics and electricity with a seal and approved by the municipality;

(3)  a complete ground analysis;

(4)  a copy of the memorandum provided for in article 1787 and following of the Civil Code;

(5)  a copy of the building permit issued by the municipality; and

(6)  a copy of the preliminary contracts.

O.C. 841-98, s. 87; O.C. 920-2001, s. 3.

§ 4 . — Other conditions

88. Where an undertaking fails to meet the requirements set forth in sections 84 to 87 or when it is impossible to calculate the financial criteria set forth in subparagraph 2 of the first paragraph of section 84, the manager may require any other condition for the same purposes, taking into account the technical competence of the undertaking.

The manager may require security of a value greater than that mentioned in subparagraph 1 of the first paragraph of section 84 and in subparagraph 1 of the first paragraph of section 85 where he has reason to believe that the solvency of the undertaking so requires.

O.C. 841-98, s. 88.

88.1. The manager may also require from the contractor that the contractor supply the following information, if the manager considers it appropriate considering the complaints received or the financial situation of the undertaking:

(1)  detailed cost estimates for the construction of a building;

(2)  any document evidencing a change to the contract;

(3)  when the work concerns multifamily buildings held in divided co-ownership having more than 5 private portions, a copy of the list of sale prices of the co-ownership units, a list of the units sold, the amount of the advance payments collected or to be collected and, where a supervisory mandate has been entrusted to a member of a professional order, a copy of such a mandate; and

(4)  interim financial statements.

O.C. 39-2006, s. 25.

§ 5 . — Term of Membership

89. Membership is valid for 1 year.

Notwithstanding the first paragraph, the term of membership of a person who already holds a licence issued under the Building Act (chapter B-1.1) corresponds to the remaining duration of the licence thus amended.

O.C. 841-98, s. 89.

90. Membership takes effect only from the date on which the Board issues the appropriate licence to the contractor.

O.C. 841-98, s. 90.

§ 6 . — Renewal of Membership

91. The contractor’s membership is renewed if he sends to the manager, at least 30 days before the expiry date of his membership, an application for renewal demonstrating that he meets the conditions prescribed in this Regulation to obtain a certificate of accreditation and if he pays the fees required by the manager.

O.C. 841-98, s. 91.

92. An application for renewal may be received after the period prescribed in section 91 but before the expiry date of the membership if the contractor demonstrates that he had a valid reason not to comply with that section.

O.C. 841-98, s. 92.

§ 7 . — Cancellation of Membership

93. The manager may cancel a membership where the contractor is in any of the following situations:

(1)  he no longer meets one of the conditions prescribed in this Regulation to obtain a certificate of accreditation;

(2)  he is reticent or makes a false declaration;

(3)  he fails to pay fees for membership, membership renewal or registration;

(4)  his constructions fail to meet the quality criteria required by the manager;

(5)  he fails to complete work related to a building or carry out the repairs required in accordance with the manager’s requirements;

(6)  the manager was required to make a payment following the contractor’s failure to perform his obligations pertaining to reimbursement of partial payments, to relocation, moving and storage of the beneficiary’s property, to completion of the work and to the guarantee against defects and poor workmanship, faulty design, construction or production of the work, or the unfavourable nature of the ground;

(7)  for the execution of construction work, he uses the services of another contractor not licensed by the Board for that purpose;

(8)  where the contractor is a legal person, one or more of its shareholders or officers has or have been, at any time whatsoever, shareholders or officers of another accredited or formerly accredited legal person having failed to perform the obligations required of it under a membership agreement; or

(9)  he fails to send the documents required by the manager or to furnish the guarantees or security required by the manager under this Regulation.

O.C. 841-98, s. 93; O.C. 39-2006, s. 26.

94. The contractor’s membership ceases to have effect once the contractor no longer holds the appropriate contractor’s licence issued by the Board.

O.C. 841-98, s. 94.

95. On the death of a holder of a certificate of accreditation, the liquidator of the succession, the heir, the legatee by particular title or the deceased’s legal representative may continue his activities for up to 90 days from the date of the death.

O.C. 841-98, s. 95.

§ 8 . — Special Provisions

96. The rights of the beneficiary are not affected by the cessation of effect of the contractor’s membership.

O.C. 841-98, s. 96.

97. A beneficiary who has entered into a contract for the sale or construction of a building provided for in section 2 with a contractor who is a member of an approved plan but who does not hold the appropriate certificate of accreditation does not lose the benefit of the guarantee applicable to that building.

O.C. 841-98, s. 97.

DIVISION II MEDIATION

98. Notwithstanding section 106, a beneficiary and a contractor may, within 30 days following receipt by registered mail of the decision of the manager concerning a claim, agree to apply for mediation to try and reach an agreement about the dispute between them.

O.C. 841-98, s. 98; O.C. 39-2006, s. 27.

99. Upon receipt of an application for mediation, the Minister of Labour shall appoint the mediator chosen by the beneficiary and the contractor from a list of persons already established by him. The Minister shall forward a copy of that appointment to the manager.

O.C. 841-98, s. 99.

100. Any agreement that settles the dispute in part or in all shall be put in writing, signed by the mediator, the beneficiary and the contractor and binds both parties and the manager. The mediator shall forward a copy of the agreement to the manager and to the Minister, as soon as it is signed, by registered mail.

O.C. 841-98, s. 100.

101. The manager may take part in the mediation. In such a case, the agreement shall also be signed by the manager to bind him and the mediator shall forward a copy of the agreement to the Minister, as soon as it is signed, by registered mail.

O.C. 841-98, s. 101.

102. The costs of mediation shall be shared equally by the beneficiary and the contractor, except if they both agree otherwise. Notwithstanding the preceding, the manager shall pay for a third of the costs when he takes part in the mediation.

O.C. 841-98, s. 102.

103. Unless the beneficiary, the contractor and, where applicable, the manager agree to it, nothing that was said or written during a mediation session is admissible in evidence.

A mediator may not divulge what was disclosed to him or what he became aware of while carrying out his duty or present personal notes or a document made or obtained during mediation before a court, a body or a person carrying out judicial or quasi-judicial duties.

O.C. 841-98, s. 103.

104. If the mediator becomes unable to act, he shall be replaced according to the procedure followed for his appointment.

O.C. 841-98, s. 104.

105. An agreement may not depart from the provisions of this Regulation.

O.C. 841-98, s. 105; O.C. 141-99.

DIVISION III ARBITRATION

§ 1 . — Application for Arbitration

106. Any dispute pertaining to the manager’s decision concerning a claim or the refusal or cancellation of the contractor’s membership shall be dealt with exclusively by the arbitrator appointed under this Division.

The interested parties who apply for arbitration are,

(1)  for a claim, the beneficiary or the contractor; and

(2)  for membership, the contractor.

An application for arbitration concerning the cancellation of a contractor’s membership shall not suspend the enforcement of the manager’s decision, unless the arbitrator decides otherwise.

O.C. 841-98, s. 106.

107. An application for arbitration shall be sent to an arbitration body authorized by the Board within 30 days following receipt by registered mail of the manager’s decision or, where applicable, the advice of the mediator concluding to partial or total failure of the mediation. The body shall appoint an arbitrator from a list of persons drawn up by it beforehand and sent to the Board.

O.C. 841-98, s. 107; O.C. 39-2006, s. 28.

108. As soon as the arbitration body receives an application for arbitration, it shall notify the other interested parties and the manager.

O.C. 841-98, s. 108.

109. As soon as that notice is received, the manager shall send to the arbitration body the file on the decision that is subject to arbitration.

O.C. 841-98, s. 109.

110. As soon as the arbitrator is appointed, the arbitration body shall give the interested parties the explanatory document prescribed in paragraph 6 of section 128.

O.C. 841-98, s. 110.

111. Before or during the arbitration proceedings, an interested party or the manager may request necessary measures to ensure the preservation of the building.

O.C. 841-98, s. 111.

§ 2 . — Arbitrators

112. Only natural persons with experience in guarantee plans or having professional training in matters related to the questions raised by the arbitration, such as in finance, accounting, construction techniques or law, may be accredited as arbitrators with the arbitration body.

O.C. 841-98, s. 112.

113. If the arbitrator is unable to fulfil his mission or fails to perform his duties within the periods prescribed, an interested party or the manager may address the arbitration body for revocation of the arbitrator’s mandate.

O.C. 841-98, s. 113.

114. A decision on the recusation or revocation of an arbitrator is final and is not subject to appeal.

O.C. 841-98, s. 114.

115. In the case of an arbitrator’s recusation, revocation, death or incapacity to act, the arbitration body shall replace him by a new arbitrator who shall decide on the resumption or continuation of the hearing. The new arbitrator shall act within the periods prescribed in sections 117 and 122.

O.C. 841-98, s. 115.

116. An arbitrator shall decide in accordance with the rules of law; he shall also appeal to fairness where circumstances warrant.

O.C. 841-98, s. 116.

§ 3 . — Hearing

117. The hearing of an application for arbitration shall begin within 30 or 15 days of its receipt, depending on whether the application concerns a claim or membership.

O.C. 841-98, s. 117.

118. The arbitrator shall give to the interested parties and to the manager or to their representatives at least 5 days’ notice in writing of the date, time and place of the hearing and, where applicable, notice of the date on which he will inspect the property or visit the premises.

O.C. 841-98, s. 118.

119. The following questions shall be referred to the ordinary courts:

(1)  the imposition of a conservatory measure with regard to a third party;

(2)  the issue of a mandate against a witness compelled to give evidence but refusing to appear;

(3)  the case of an unwilling witness;

(4)  the homologation of an arbitration award.

O.C. 841-98, s. 119.

§ 4 . — Arbitration Award

120. An arbitration award, once it is made, is binding on the interested parties and on the manager.

An arbitration award is final and not subject to appeal.

O.C. 841-98, s. 120.

121. An arbitration award shall not be put into compulsory execution unless it has been homologated in accordance with the procedure prescribed in articles 946 to 946.6 of the Code of Civil Procedure (chapter C-25).

O.C. 841-98, s. 121.

122. An arbitration award in writing and giving reasons therefor shall be sent to the interested parties and to the manager within 30 or 15 days following the date of the end of the hearing, depending on whether the decision concerns a claim or membership.

The interested parties may agree to an additional period.

O.C. 841-98, s. 122.

123. Arbitration fees are shared equally between the manager and the contractor where the latter is the plaintiff.

Where the plaintiff is the beneficiary, those fees are charged to the manager, unless the beneficiary fails to obtain a favourable decision on any of the elements of his claim, in which case the arbitrator shall split the costs.

Only the arbitration body is empowered to draw up an account of arbitration fees for payment thereof.

O.C. 841-98, s. 123.

124. The arbitrator shall, where applicable, decide on the amount of reasonable fees for a relevant expert’s opinion to be reimbursed by the manager to the plaintiff where the latter wins the case in whole or in part.

This section does not apply to a dispute concerning the contractor’s membership.

O.C. 841-98, s. 124.

125. Expenses incurred by the interested parties and by the manager for the arbitration shall be borne by each one of them.

O.C. 841-98, s. 125.

126. The arbitration body shall keep the arbitration files for 2 years from the filing of the arbitration award or, in case of a legal challenge of that decision, until the final decision of a court of justice disposing thereof.

O.C. 841-98, s. 126.

§ 5 . — Arbitration Body

127. Only a body devoted entirely to the arbitration of disputes may be authorized by the Board to organize the arbitration provided for in this Regulation.

O.C. 841-98, s. 127.

128. Authorization of the Board is granted to a body meeting the following conditions, in addition to the conditions provided for by the Building Act (chapter B-1.1):

(1)  it has a mechanism for updating the list indicating each arbitrator’s area of expertise and available to any interested person on request;

(2)  it has a permanent program for training arbitrators on the content of the guarantee plan such as the guarantees themselves and related notions of civil law, the terms and conditions of contractors’ membership in the plan and the arbitration procedure;

(3)  it has a code of ethics applicable to arbitrators and a procedure to be applied in cases of disputed accounts;

(4)  it has an arbitration service accessible in each administrative region of Québec, with arbitrators living in each region;

(5)  is has an accelerated arbitration procedure consisting of, in addition to the rules prescribed in this Division, provisions concerning

(a)  the application for arbitration;

(b)  the preparation of the file;

(c)  the appointment, competence and powers of the arbitrator;

(d)  the obligation of the arbitrator to inform the parties; and

(e)  the order of the arbitration procedures, in particular the periods, the recusation and revocation of the arbitrator, the summoning of witnesses and the arbitration award; and

(6)  it has an explanatory document concerning the arbitration procedure, in particular with regard to

(a)  the right of the interested parties to be represented by a person of their choice;

(b)  the rules of procedure and of evidence to be followed;

(c)  the procedure for summoning witnesses and experts;

(d)  the possibility of inspecting the property or visiting the premises;

(e)  the recording of an agreement between the beneficiary, the contractor and the manager or of discontinuance in an arbitration award; and

(f)  the procedure for homologating an arbitration award.

O.C. 841-98, s. 128.

129. The arbitration body shall transmit to the arbitrator the file of the manager concerning the decision to which the arbitration pertains and the documents produced by the interested parties in support of their application or defense, so that the arbitrator will have as complete a file as possible.

O.C. 841-98, s. 129.

130. The arbitration body shall provide administrative support for the arbitrators’ activities, with due respect for the autonomy and independence of each of its arbitrators.

O.C. 841-98, s. 130.

131. The arbitration body shall publish annually a compilation of arbitration awards made under this Division.

O.C. 841-98, s. 131.

DIVISION IV RULES PERTAINING TO GUARANTEE CONTRACTS

132. In addition to the text of the guarantee prescribed in Subdivision 1 or 2 of Division II of Chapter II, where applicable, the guarantee contract shall include

(1)  the names and addresses of the beneficiary and the contractor;

(2)  the number of the contract, its date, and the address of the place where it is signed by the contractor;

(3)  a description of the building covered by the guarantee;

(4)  the manager’s name, address, and telephone and fax numbers;

(5)  the contractor’s accreditation number and licence number and the words “licensed by the Régie du bâtiment du Québec”; and

(6)  the compulsory nature of the guarantee.

O.C. 841-98, s. 132.

133. The guarantee contract shall indicate that its content has been approved by the Régie du bâtiment du Québec and specify the number and date of the Board’s decision.

O.C. 841-98, s. 133.

134. The guarantee contract shall be drawn up clearly and legibly, at least in duplicate. It shall be typed or printed.

O.C. 841-98, s. 134.

135. The contractor’s signature shall be affixed on the last page of the copies of the guarantee contract following all the stipulations.

O.C. 841-98, s. 135.

136. The signature affixed by the contractor is binding on the manager.

O.C. 841-98, s. 136.

137. The contractor shall give a copy of the duly signed guarantee contract to the beneficiary and send a copy thereof to the manager.

O.C. 841-98, s. 137.

138. The beneficiary is required to perform his obligations set forth in the contract entered into with the contractor only from the time he is in possession of a copy of the duly signed guarantee contract.

O.C. 841-98, s. 138.

139. Any clause of a guarantee contract that is irreconcilable with this Regulation is void.

O.C. 841-98, s. 139.

140. The beneficiary may not, by special agreement, waive the rights granted to him by this Regulation.

O.C. 841-98, s. 140.

CHAPTER V TRANSITIONAL AND FINAL PROVISIONS

141. (Obsolete).

O.C. 841-98, s. 141.

142. (Obsolete).

O.C. 841-98, s. 142.

143. Only those buildings for which the preliminary contract or the contract of enterprise is signed between a beneficiary and an accredited contractor whose construction work begins from the date of coming into force of this section are covered by the guarantee.

O.C. 841-98, s. 143.

144. (Omitted).

O.C. 841-98, s. 144.

SCHEDULE I

(s. 50)

INITIAL RESERVE

                                                       Initial reserve,            
Buildings covered                                         in dollars   
                                                        per guarantee  
                                                         certificate

Detached, semi-detached or row-type 
single-family dwelling, held or not held
in divided co-ownership;

Multifamily building from a duplex to a
quintuplex, not held in divided                              510                  
co-ownership;

Multifamily building comprising more 
than 5 dwelling units and held by a 
non-profit organization or a 
cooperative, not held in divided 
co-ownership.

Multifamily building of combustible 
construction and multifamily building of 
noncombustible construction comprising              
no more than 4 private portions stacked 
one above the other, held in divided
co-ownership.                                                760

O.C. 841-98, Sch. I; O.C. 920-2001, s. 4.

SCHEDULE II

(s. 78)

OBLIGATIONS OF THE CONTRACTOR

The contractor shall undertake

(1) to meet the membership criteria required by the manager under a regulation of the Régie du bâtiment du Québec respecting the guarantee plan for new residential buildings;

(2) to notify the manager that notice of intention or of a proposition has been filed in respect of an insolvent person under section 65.1 of the Bankruptcy and Insolvency Act (R.S.C. 1985 c. B-3);

(3) to comply with accepted practice and the standards in force applicable to the building;

(4) without restricting his liability under the laws in force in Québec, to honour the guarantee required of him under the guarantee plan approved by the Board and, where applicable, to complete the work or to repair the defects and poor workmanship covered by the guarantee, once the manager is of the opinion that a claim is founded, except in the case of a dispute;

(5) to compensate the manager for any loss incurred or to reimburse any payment he has made following his failure to honour the guarantee required of him under the guarantee plan;

(6) to register with and pay immediately to the manager the premium specified for each class of building upon the occurrence of the first of the following events:

(a) the signing of the preliminary contract or the contract of enterprise;

(b) the issue of the building permit; or

(c) the beginning of construction work on the building covered;

(7) to perform each and every obligation required of him by the manager as part of the guarantee plan for any building covered, whether or not the building is registered with the manager;

(8) to give notice to the manager, on the form supplied by him, of each and every partial payment made to him for the purchase of any building covered, as soon as each payment is made;

(9) to submit to the manager, on the form supplied by him, a list of work on the building, notice of which was given in writing at the time of acceptance of the building or of the private portion, as the case may be, and which must be completed;

(10) to supply, on the manager’s request, plans for the design or completion of the architecture, structure, mechanics, plumbing and electricity, as well as the specifications for a building covered;

(11) to send, on the manager’s request, continuous supervision reports and the certificate of conformity prepared by a building professional independent of the contractor, where applicable;

(12) to give notice of the end of the work on the common portions to each known beneficiary and to the syndicate of co-owners and to notify thereof the manager and any future purchaser of a private portion at the time of conclusion of the contract;

(13) to carry out an inspection prior to acceptance, with the beneficiary or with the building professional designated by the syndicate of co-owners and the latter, where applicable, using a pre-established list of items to be checked supplied by the manager, to give a duly completed copy thereof to the building professional, the syndicate, each known beneficiary and any new purchaser at the time of conclusion of the contract and to send the findings thereof to the manager on request;

(14) to give notice to the manager of the end of the work where the beneficiary is unknown and to notify thereof the future purchaser at the time of conclusion of the contract;

(15) to produce, on the manager’s request, the periodic reports and the certificates of conformity drawn up by an architect or engineer at the time of construction of any building for which supervision of construction work is required in accordance with the codes and standards in force;

(16) to comply with the inspection program set up by the manager, to provide access to the construction work site of each building covered to any duly appointed representative of the manager and to file the reports ensuing there from where applicable;

(17) to collaborate with any duly appointed representative of the manager;

(18) where applicable, to take all necessary measures to ensure the preservation of the building or to reimburse the beneficiary where the latter was forced to take such measures urgently; and

(19) to pay the required fees for membership in the plan or for membership renewal, for each inspection required by the manager and for arbitration, where applicable.

O.C. 841-98, Sch. II; O.C. 39-2006, s. 29.

REFERENCES

O.C. 841-98, 1998 G.O. 2, 2510

O.C. 842-98, 1998 G.O. 2, 2531

O.C. 141-99, 1999 G.O. 2, 200

O.C. 920-2001, 2001 G.O. 2, 4781

O.C. 39-2006, 2006, G.O. 2, 878

S.Q. 2006, c. 22, s. 177

S.Q. 2010, c. 40, s. 92

S.Q. 2012, c. 11, s. 32