Insurance indemnities deposited in trust with a notary

Steps that allow for better protection of the condominium corporation, owners, and creditors following a significant loss or partial or total destruction of a jointly-owned building.

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514 374-4303
Administration or management of insurance benefits

In order to minimize problems that may arise from a loss resulting in the total or partial destruction of the condominium, the condominium corporation, the unit owners, and the mortgage creditors should consider creating a trust agreement to plan for the repair or reconstruction of the building. The notary, a real estate professional, is well positioned to act as the coordinator for this repair or reconstruction and administer the trust agreement. The insurance benefits paid out after the loss can be deposited into the trust account of our office.

The decision to rebuild and the role of the administrator of the trust agreement

Once the decision to repair or rebuild is made, it becomes essential to coordinate the efforts of the condominium corporation, the general contractor, the administrator of the trust agreement, etc.

The administrator of the trust agreement will hold the insurance benefits in their trust account. These funds will be used for the repair or reconstruction of the common areas and unit owners' individual units. The administrator will disburse these funds to the chosen contractors as the work progresses. As the administrator of the trust agreement, the notary is authorized to take any necessary measures, such as obtaining certificates from the architect or project manager, to ensure that the funds are used for the repair or reconstruction of the condominium. These payments, made as the work progresses, are called progressive disbursements.

Progressive disbursements

The use of progressive disbursements for payment of the repair or reconstruction work of the condominium is a delicate mechanism for both the condominium corporation, unit owners, and mortgage creditors. The use of progressive disbursements requires expertise and coordination of several elements, such as:

  • Verification of the claims received from subcontractors;
  • Confirmation from an expert of the progress of the work;
  • Verification of any adverse entries in the land registry;
  • Obtaining partial or final receipts from all parties involved for previous disbursements;
  • Control of deductions by the contractor and subcontractors;
  • Obtaining a list of amounts to be paid;
  • Issuing checks from the trust account to the various parties involved;
  • Verification of the updated budget; verifying that the cost of the remaining work does not exceed the remaining balance in the trust account.

For this type of mandate, the notary must seek the assistance of an expert to determine the elements required to successfully complete the project. The notary must also be able to accurately assess the costs, so that the owner or creditor always has a sufficient amount to cover the remaining work.

Having already worked on cases involving progressive disbursements, Notaire-Direct has developed a method in this regard. Therefore, before the start of the work, a meeting will be organized between the key stakeholders, including the notary, the general contractor, the project manager, the representatives of the condominium corporation, and the insurer. During this meeting, the participants establish the process, and our office then provides the project manager and the general contractor with a package of various documents that they must complete as the work progresses and submit to us before each disbursement.

The fees for progressive disbursements, the drafting of the trust agreement, and the holding of the insurance benefits in trust are billed at an hourly rate or a flat fee.

It is therefore important to consult with Notaire-Direct, a specialist in the construction field, because:

  • they are experts in contract drafting;
  • they will verify the capacity of the signatory of the receipt;
  • they are required to have liability insurance;
  • they will complete the necessary documentation and perform verifications before issuing progressive disbursements.
If you need more information on this service, please contact us
514 374-4303
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