This article examines whether the volumetric subdivision of a residential building, combined with the use of a right of superficies, may constitute a legally viable alternative to conversion into divided co-ownership. More specifically, it considers whether this cadastral technique can achieve many of the economic and functional effects of divided co-ownership while avoiding certain constraints imposed by the legal regime governing the conversion of rental properties.1

Introduction

Divided co-ownership, which comprises private and common portions, has been a well-established form of property ownership in Québec since its introduction into Québec law in 1969. Since then, the legislative framework governing divided co-ownership has been supplemented by measures aimed, among other things, at ensuring that co-owners have the financial resources necessary to maintain the immovable and its common portions.2

The Civil Code of Québec (“C.C.Q.”) now imposes significantly more stringent obligations on syndicates of co-ownership regarding the funding of the contingency fund. Whereas contributions were previously often determined on the basis of a minimum percentage of common expenses, the legislature now requires the amounts accumulated in the fund to reflect the actual needs of the immovable.

In this regard, article 1071 C.C.Q. provides the following:

“[…] The board of directors obtains a contingency fund study establishing the sums necessary for the fund to be sufficient to cover the estimated cost of major repairs and of replacement of common portions. The study is conducted in accordance with the standards established by a government regulation, which designates among other things the professional orders whose members are authorized to conduct such studies and determines the intervals at which a new study must be obtained by the board of directors. The standards may vary according to the characteristics of an immovable.

The sums to be paid into the contingency fund are fixed on the basis of the recommendations made in the contingency fund study and taking into account ongoing developments in the co-ownership, in particular the amounts available in the contingency fund.

Until the developer obtains the contingency fund study, the sums to be paid into the fund must correspond to 0.5% of the reconstruction cost of the immovable.”

Accordingly, the quantum of the contingency fund is no longer based on an arbitrarily determined minimum contribution. Instead, the amounts paid into the fund must be determined in accordance with the recommendations of a professional study intended to ensure that the fund is sufficient to cover the anticipated cost of major repairs and the replacement of common portions. The legislature has therefore adopted an approach based on the actual needs of each immovable, rather than a uniform formula applicable to all co-ownerships.

Until the contingency fund study is obtained, a developer constructing a divided co-ownership immovable is required to pay into the fund an amount equal to 0.5% of the immovable’s reconstruction cost. Thereafter, the developer remains liable for contributions to the contingency fund in respect of any unsold private portions of which it remains the owner.3

Although the objectives of the C.C.Q. concerning the funding of the contingency fund are objectively desirable, they may nevertheless impose significant and potentially immediate financial pressure on developers in respect of unsold private portions of their developments. This financial pressure is also borne by co-owners, who must contribute to the contingency fund even before any repairs or maintenance are required. While this approach promotes prudent financial management for the benefit of all co-owners, it nevertheless imposes financial obligations on both the developer syndicate and the co-owners themselves from the earliest years of the immovable’s operation.

This article does not seek to challenge the objectives of Québec’s divided co-ownership regime. Rather, it considers whether, in certain circumstances, superficies and volumetric lots can produce functional outcomes comparable to those of a conversion to divided co-ownership without relying on the existing mechanism governing the conversion of immovables held in undivided co-ownership.

Some of the alternatives discussed below have been successfully implemented, while others have yet to prove their effectiveness. All of these alternatives are subject not only to the mandatory provisions of the C.C.Q. governing these matters, but also to the regulations in force in each municipal jurisdiction having zoning authority. No new construction or transformation of an existing immovable can be carried out or, by extension, financed unless the applicable zoning regulations are complied with. Some of the alternatives discussed below therefore remain theoretical unless municipal authorities authorize their implementation.

1. Volumetric lot / Superficies

The expression “volumetric lot” is not used in the C.C.Q. or in the Cadastre Act.4 It would be more accurate to refer to a “three-dimensional cadastral lot delimited by horizontal and vertical planes” or to a “cadastral volume constituting a separate property.” For the purposes of this article, however, the term “volumetric lot” is sufficiently descriptive to enable readers to visualize a cube or a volume of air. The sale of a volumetric lot may be published in the land register only if the “volume of air” is itself an immovable. That volume of air must be registered in the cadastre and assigned a lot number that distinguishes it from the other lots.

Most people are familiar with row houses, which are joined to one another by common walls and form part of a horizontal cadastral arrangement. A vertical cadastral arrangement is based on a similar logic, except that the cadastral volumes are superimposed rather than situated side by side and cannot be visually perceived unless a physical structure occupies the space they encompass. Once the volumes of air are occupied by a structure, the principles governing common walls may be applied to the floors and ceilings separating the volumes, which may then be treated as common.

2. Advantages of a vertical cadastral arrangement in certain cases

2.1 Construction of a new building

If the divided co-ownership regime under the C.C.Q. is well suited to a mixed-use immovable, the vertical cadastral system may be equally suitable, as it allows for the construction of a building consisting of separate volumetric lots situated one above another and intended for different uses. The volumes may also have different owners,5 as well as different lenders financing their acquisition and construction, with each lender able to hold a first-ranking immovable hypothec over the entirety of the relevant volumetric lot.

This approach involves two (2) main steps:

  1. First, the owner of a surface lot must carry out a cadastral operation creating one or more volumetric lots above ground,6 superimposed one above another.7 As a matter of property law, it is well established that ownership of the land carries with it ownership of everything situated on it, as well as everything constructed above it. The creation of volumetric lots does not, in itself, create superficies. Articles 1011 and 1110 C.C.Q. provide that a superficies exists or is created only where there is a renunciation of the benefit of accession. Such renunciation occurs, in particular, when the right of ownership is divided between the owner of the subsoil, who retains ownership of the land, and the superficiary, who acquires ownership of the superficial volumetric lot.
  2. Next, when the immovable is divided between the subsoil and the superficies, the parties initially involved in the project must agree in advance on the terms governing their coexistence. This requires an agreement creating various servitudes to ensure that the immovable, considered as a whole, remains functional for all concerned. The agreement also governs the maintenance of the immovable. This arrangement is very similar to the agreements applicable to divided co-ownerships with respect to private and common portions. The principal difference between these two forms of ownership is that owners of volumetric lots, whether they are owners of the subsoil or superficiaries, are not required to maintain a contingency fund.

From a construction standpoint, all owners of volumetric lots must contribute to the ongoing construction costs from the commencement of construction. As construction progresses, the costs are allocated among the various owners according to an allocation formula that evolves over the course of the project. The owners of the volumetric lots comprising the same building may pursue different, but mutually compatible, commercial purposes. For example, in a new five (5) storey building, the first storey may be owned by a retail chain, the second by a fitness centre, and the upper three (3) storeys by a third party whose business consists of leasing residential units.

This approach allows each owner to be responsible solely for its share of the construction costs attributable to its volumetric lot and to select its own lender, which need not be the same lender as that of the other owners. Where multiple lenders each hold a first-ranking immovable hypothec on a separate volumetric lot, they must also agree among themselves on the manner in which their respective hypothecary rights and recourses may be exercised.

Although they are not required to do so under the applicable legislation, the various owners may consider it appropriate to ensure that they all contribute to the common expenses of the building as a whole. This obligation may be secured by cross-hypothecs granted by each owner. The mechanics of cross-hypothecs are well established and present no particular difficulty. The cross-hypothecs would, of course, rank behind the hypothecs held by the first-ranking lenders financing the acquisition and construction of the proposed building.

2.2 An existing building, such as a residential duplex or triplex

Several municipalities in Quebec have adopted measures restricting or prohibiting the conversion of rental properties into divided co-ownership. As for existing undivided co-ownerships, it remains possible, in certain cases, to convert them into divided co-ownerships, but only with the prior authorization of the Administrative Housing Tribunal (the “TAL”).8

This article explores a different approach. The question is whether the creation of separate volumetric lots could, in certain cases and subject to applicable municipal by-laws, produce a functional result comparable to that of divided co-ownership without resorting to the traditional conversion mechanism, which entails delays and difficulties because the process requires the involvement of the TAL.

Undivided co-ownership is a widely used form of ownership for multi-unit residential properties, particularly in Montréal. In many cases, each co-owner occupies a separate dwelling for their exclusive use. However, this form of ownership has significant limitations, particularly with respect to financing and the disposition of the immovable. More importantly, a co-owner who elects to make their dwelling available for residential rental does not have the right to repossess it. These restrictions arise from article 1958 C.C.Q., which reads as follows:

“The owner of an undivided share of an immovable may not repossess any dwelling in the immovable unless the only other owner is his or her spouse.”

2.3 Legal obstacles to the conversion of volumetric lots

Although volumetric subdivision offers considerable flexibility in the legal and functional organization of a real estate complex, the conversion of an immovable currently held in undivided co-ownership may raise legal difficulties.

First, real rights already granted in respect of the relevant volumes may constitute a significant obstacle. Hypothecs, servitudes, contractual encroachments, exclusive rights of use, and operating agreements incorporated into the volumetric structure will often have to be maintained, amended, or discharged before any cadastral restructuring can occur. The consent of hypothecary creditors and holders of real rights may be required, which could significantly complicate the transaction.

Second, the conversion may generally require a comprehensive review of the legal organization of the immovable. The mechanisms governing administration, maintenance, the allocation of expenses, and the management of shared equipment will have to be replaced or adapted to ensure the coherent operation of the new ownership structure. This transition may require a substantial overhaul of the existing contractual documentation binding the various undivided co-owners.

Planning and cadastral constraints may also limit or prevent the conversion. The configuration of the volumes may not necessarily be compatible with the requirements applicable to cadastral subdivisions or proposed lots. Municipal authorizations, complex cadastral operations, or physical alterations to the immovable may therefore be required.

Finally, where several owners are involved, the conversion will frequently require unanimous consent or, at the very least, a high degree of consensus, depending on the requirements of the existing contractual arrangements. The economic interests of the various right holders may diverge, particularly where certain volumes have strategic value or benefit from special rights that cannot easily be transposed into the new legal framework.

Another significant obstacle arises from the principle of specificity of the hypothecary collateral. Under Québec law, an immovable hypothec charges the property specifically described in the constituting act and registered in the land register. A cadastral operation resulting in the creation of volumetric lots may, however, alter the cadastral identity or even the legal composition of the charged property. The disappearance or reconfiguration of a hypothecated volume therefore raises the issue of whether the hypothecary charges will continue to encumber the newly created lots. This situation will generally require the involvement of the hypothecary creditors to confirm the continuity of their security, obtain the necessary consents, and, where applicable, modify the hypothecary collateral comprised in the charged immovables.

2.4 Fundamental distinction between a volumetric lot and divided co-ownership

Although a volumetric structure may, in practical terms, produce certain results comparable to those sought through divided co-ownership, the two regimes remain fundamentally different from a legal standpoint.

Divided co-ownership is based on the division of the right of ownership in a single immovable among several co-owners. Each fraction includes a private portion together with an undivided share of the common portions. The existence of these common portions necessarily results in the establishment of a syndicate of co-owners responsible for the administration and preservation of the immovable, as well as the application of a set of mandatory rules under the C.C.Q., including those relating to the contingency fund, the maintenance log, common expenses, and the governance of the co-ownership.

By contrast, volumetric subdivision is based on the creation of distinct immovables consisting of autonomous cadastral volumes. Each owner therefore holds a complete right of ownership in a volumetric lot rather than a fraction of an immovable comprising common portions. The relationships among the various owners do not arise from a declaration of co-ownership or from the specific provisions of the C.C.Q. applicable to divided co-ownership. Rather, they arise from reciprocal servitudes, contractual arrangements, and, where applicable, security mechanisms agreed upon among the owners.

In this context, the elements that fall within the legal framework of divided co-ownership may generally be reproduced contractually within a volumetric structure. The parties may therefore agree upon rules governing the maintenance of the immovable, the use of shared infrastructure, the allocation of expenses, dispute resolution mechanisms, and the security intended to ensure the performance of their respective obligations. These obligations, however, derive from the parties’ agreement rather than from a statutory regime specifically designed for divided co-ownership.

Consequently, even though volumetric subdivision may sometimes achieve an economic result similar to that of divided co-ownership, it is not, conceptually, merely a variation of divided co-ownership. Instead, it is based on a different legal rationale in which the fundamental unit is no longer the fraction of co-ownership, but rather the distinct immovable created through the combined operation of three-dimensional cadastre and the right of superficies.

The debate may therefore be less about whether a volumetric lot reproduces the effects of divided co-ownership and more about the extent to which the legislature intends to reserve certain economic effects for a particular legal vehicle.

2.5 Does the volumetric lot constitute a disguised conversion?

It could be argued that the subdivision of a residential immovable into volumetric lots constitutes, in practice, a disguised conversion into divided co-ownership. Such a characterization is not, however, self-evident. A volumetric structure is based on the right of superficies and the creation of distinct immovables, rather than on the establishment of a declaration of co-ownership, a syndicate, and fractions of co-ownership. Although the economic result may sometimes resemble that of a conversion, the legal characterization remains different. The issue may ultimately have to be determined by the legislature or the courts.

It could also be argued that, where an immovable is subdivided into as many volumetric lots as it contains dwelling units so that each unit may be sold separately, the transaction is essentially intended to achieve the same economic result as a conversion into divided co-ownership. An administrative authority or a court could be called upon to examine the true nature of the transaction rather than relying solely on its legal form. The issue nevertheless remains unresolved, since the regime of superficies and the regime of divided co-ownership are based on distinct conceptual foundations.

3. Control over the rental housing stock could shift from the TAL to municipal authorities

To conclude, the subdivision of a residential immovable through volumetric lots may produce a result very similar to that of a conversion into divided co-ownership. Each unit becomes capable of being separately transferred and financed while remaining outside the legal regime of divided co-ownership. This approach could therefore make it possible to achieve several of the effects sought through a conversion without using the mechanism currently subject to authorization by the TAL.

Volumetric subdivision raises a fundamental legislative policy question: If a municipality authorizes the cadastral operations necessary to create distinct superficiary properties corresponding to autonomous dwelling units, the municipality potentially has a tool that would allow it to reorganize its housing stock without resorting to the traditional regime governing the conversion of rental immovables. In this context, the constraints currently associated with the authorization process before the TAL could lose a significant portion of their practical effectiveness.

Therefore, the debate may no longer be whether the volumetric lot constitutes an alternative to divided co-ownership. The real question is whether Québec law intends to permit a functional result equivalent to a conversion to be achieved through the right of superficies and cadastral operations, without the prior involvement of the TAL. Accordingly, if municipalities possess the practical authority to permit or prevent the creation of superficiary properties corresponding to autonomous dwelling units, a significant portion of the control over the transformation of the rental housing stock could shift from the TAL to municipal authorities.

If such use of volumetric lots were to become widespread, the legislature could ultimately be called upon to determine whether the existing mechanisms for controlling conversions remain appropriate. Finally, it must be recognized that the implementation of a volumetric structure also raises tax considerations that fall outside the scope of this article. The consequences relating to land transfer duties, the GST and QST, and certain real estate restructuring transactions will have to be considered on a case-by-case basis.

Me Maxime B. Rhéaume, lawyer and partner at Miller Thomson LLP, lecturer in Security Law in the Master’s Program in Notarial Law at the Faculty of Law of the Université de Montréal, lecturer in Corporate Law in the Bachelor of Laws and Master’s Program in Notarial Law at the Faculty of Law of the Université de Montréal, lecturer in Corporate Law in the Master’s Program in Notarial Law at the Faculty of Law of the University of Ottawa (Winter 2024), lecturer in Partnership Law in the Bachelor of Laws Program at the Faculty of Law of the Université de Montréal, and adjunct instructor in the Master’s Program in Business Law at the Faculty of Law of Université Lumière Lyon 2.

  1. The author is the originator of the subject matter addressed in this article. However, certain passages were generated, suggested, or rephrased with the assistance of ChatGPT and were subsequently reviewed and approved by the author. The author also used ChatGPT in connection with the review and analysis of all or portions of the following texts: François BROCHU, « La copropriété divise et la propriété superficiaire notamment en droit civil québécois », dans La mise en copropriété de l’immeuble, Droit et Ville, no 72, 2011/2, Institut des Études Juridiques de l’Urbanisme, de la Construction et de l’Environnement (IEJUC), Toulouse, p. 21-30; Sylvio NORMAND, Introduction au droit des biens : le manuel de l’étudiant, 4e éd (Montréal : Wilson & Lafleur, 2026); François FRENETTE, La propriété superficiaire, 3e éd., Montréal, Chambre des notaires du Québec / Wilson & Lafleur, 2014, Collection bleue, Série Répertoire de droit; Christine GAGNON, « Applications contemporaines de la propriété superficiaire », dans Développements récents en droit immobilier (2002), Cowansville, Éditions Yvon Blais, 2002, 61; Jean-Guy CARDINAL, Le droit de superficie, modalité du droit de propriété : étude historique et critique du concept juridique et exposé de ses applications, thèse de doctorat en droit, Université de Montréal, Montréal, Wilson & Lafleur, 1957. The references to the statutory provisions cited have been verified. ↩︎
  2. An Act respecting the co-ownership of immovables, S.Q. 1969, c. 76. ↩︎
  3. Article 1072 C.C.Q. ↩︎
  4. Cadastre Act, CQLR c. C-1, art 19.2. ↩︎
  5. The owner is an owner in their own right, not a co-owner in divided or undivided co-ownership. ↩︎
  6. Volumetric lots may also be located below ground level and intended for underground works. ↩︎
  7. Volumetric lots may also be created below ground level, for example, for the construction of underground garages and the provision of storage space. ↩︎
  8. Article 51 of the Act respecting the Administrative Housing Tribunal, CQLR c. T-15.01. ↩︎