Regulation

Presentation

Qurtuba Housing Coop. (hereinafter “Qurtuba”) has been registered in Quebec since 1990. It is a not-for-profit organization that purchases housing units and transfers them to members in good standing once the regulatory requirements are met.

Objective

The main objective of Qurtuba is to offer to its members the opportunity to acquire properties at reasonable prices while avoiding paying usurious interest (Riba). It also allows investors to derive reasonable profits from their investments and to make both moral (Halal) and material profits. 

Membership

Any member in good standing is eligible for the benefits offered by the cooperative. To become a member, you must meet the following conditions: (1) Open an account by filling out the membership form (2) Pay the fees of $ 75 and purchase a minimum of 20 class B shares (value of each share: $ 100) at the time of enrollment (3) Purchase a minimum of 20 class B shares per calendar year.

Accounts types

The members of Qurtuba have the choice between two types of accounts: individual account and joint account. Regardless of the type of account, payments must come from the account holder(s)’ bank account. 

Individual Accounts

The individual account belongs to only one person, the main holder. All operations regarding the account can only be carried out by the main account holder, unless a written proxy is given to another person.

Joint Accounts

Qurtuba allows a maximum of two (2) people, with or without family ties, to open a joint account. The joint account confers the same rights and obligations on the holders especially the investment (purchase of shares) and the withdrawal (sale of shares). This type of account gives only one right to vote at the general meetings of members. On the death of one of the holders the joint account is blocked until the results of testamentary research are done and are obtained.

Eligibility to House Purchasing

To become eligible to purchase a housing unit, the member must have accumulated a minimum of 600 class B shares ($ 60,000). In this case, the member interested in beginning the purchase process must submit a request to be added to the waiting list. Inclusion on the waiting list takes place at the beginning of the quarter following that in which the application was received. Prioritization on the waiting list is based on seniority, i.e. the date on which the member reaches the 600-share threshold. In order to remain on the waiting list and keep their priority rank, the member must maintain the minimum amount of 600 class B shares.

Member who withdraws from the waiting list will retain their seniority. The members may rejoin the waiting list. To do so, they must send a request and their name will reinstated on the list at the beginning of the quarter following that in which the application was received. A request to be removed from the waiting list received during a quarter will make the member eligible for dividends as of the quarter following the one in which the request was received.

RRSP/FHSA

Qurtuba reserves the right to add members who accumulate the equivalent of $ 60,000 to the waiting list by combining their investment with the cooperative and the amounts held as part of a Registered Retirement Savings Plan (RRSP) or First Home Savings Account (FHSA) with any Québec financial institution. The maximum amount eligible as an RRSP/FHSA is $20,000.

Selection Process

Depending on their seniority on the waiting list, members whose turn has arrived are contacted so that they can decide whether they are ready to start the purchase process. The member has a deadline to send his response. If the member is ready, their name is entered in the purchase list for the period in question. If the member is not ready to buy a house, their turn will be awarded to the next member in the priority list. Failure to reply within the required time means that the member in turn gives up and must write to Qurtuba to reconsider their name in a future selection.

Eligibility to Dividends

Qurtuba distributes the net income from its operations to its members who hold Class B shares in the form of dividends. Dividends are calculated quarterly on class B shares which are held throughout the quarter (from the first day to the last day of the quarter). A minimum of 20 class B shares ($ 2,000) must be held in order to be eligible for patronage dividends. Certain situations, indicated in the present regulations, make the member ineligible for dividends.

Payment of Dividends

The dividend rate is variable and depends on the performance of Qurtuba. Patronage dividends are calculated on the quarterly balance of the shares held and paid on a quarterly basis, in the month following the end of the quarter in question. They are declared once a year, in January of the following year. By default, patronage dividends are reinvested in the cooperative, unless the member decides to withdraw them from his investment account.

Dividends and House Purchase Process

Members in good standing wishing to acquire a housing unit receive dividends on their investments as long as their name is not on the waiting list. Dividends are therefore not granted from the quarter during which the member’s name is placed on the waiting list.

Authorization Letter / Beginning of the Purchase Process

The selected member receives a letter of  authorization allowing him to negotiate with the sellers and make conditional offers on behalf of Qurtuba. This letter is valid for three (3) months. It could be renewed only once at the discretion of Qurtuba.

Type and Location of the Housing Unit

The member chooses the type and the location of the house he wants Qurtuba to buy from them. However, the house must be located in the province of Quebec. Also, Qurtuba does not acquire land or income properties.

Choosing the property

The authorized member makes offers for properties he/she has chosen. The offer must be conditional to Qurtuba’s acceptance of both the home inspection and its specific financing within a period of at least ten (10) days. If the conditional offer is accepted by the seller, the member must get the house inspected by a professional.

Title of the Buyer Name Section

As the buyer of the housing unit is Qurtuba, the “Buyer Name” section of the offer should read as follows: “the buyer is Qurtuba Housing Coop.  represented by Mr … and/or Mrs … [Name of the authorized member] “.

Documents to Submit for Final Approval

To ask Qurtuba for final approval for the purchase of the house, the member submits the following documents: the accepted purchase offer, the counteroffer(s) [if applicable], the inspection report, the declaration of the seller, the up-to-date certificate of location describing the current state of the property, the municipal value and the declaration of divided co-ownership [if applicable]. Following the analysis of these documents, Qurtuba issues a letter of approval for the acquisition of the property. Subsequently, the cooperative appoints a notary to schedule the purchase transaction.

Qurtuba and Member Contributions

Qurtuba contribution to the purchase of housing units is 80% of the purchase price, up to $400,000. For housing units whose price exceeds $500,000, it is up to the member to finance the exceeding amount. If the member’s investment in Qurtuba does not reach the minimum threshold, the member must sign a pledge to contribute the missing funds at the least 10 days before the closing. With an accepted offer, the member can withdraw their RRSPs/FHSAs without being taxed under The Home Buyers’ Plan (HBP) program.

Houses Sold Without Legal Warranty

Qurtuba accepts the acquisition of housing units sold without legal warranty of quality on condition that the member signs a notarized document which fully releases the cooperative of any responsibility. By doing so, the member waives his right to sue the cooperative for latent defects and agrees to take under his sole responsibility any future problem in the property.

New Construction Process

If the member is the owner of the land on which the construction project will be done, the member will have to transfer it to Qurtuba. If the member does not own the land, the price and payment schedule of the project builder will be followed. The member solicits bids from builders or research construction projects. The member will forward the bid or project of interest to Qurtuba. Qurtuba performs the necessary checks on the builder (reliability, trustworthiness, project history, etc.). If the results of the checks are conclusive, the member will be authorized to sign the pre-contract (preliminary contract) on behalf of Qurtuba. Within days of signing the pre-contract, the member submits the pre-contract for approval (legal deadline of 10 days not to be exceeded). A conditional approval is issued. Conditions include delivery of the property, receipt of the pre-acceptance inspection report and certificate of location which do not indicate any non-conformities. Upon delivery of the property, the price of the property will consider the purchase cost of the land and the cost of the construction project if the land was in the possession of the member. Otherwise, the price of the property will be the cost of the construction project if the land price is included.

Participating Finance

Participating finance is the funding method used by Qurtuba. According to this principle, the member makes payments, part of which is used to pay the cost of occupying the housing unit (occupancy fees) and the other part which is used to repay the capital.

The payments made by the member enable him to acquire Qurtuba’s shares in the housing unit. As a result, and since occupancy costs are calculated on the basis of Qurtuba’s shares in the unit, as payments are made, the portion of payments used to pay occupancy costs for the housing unit decreases, while the portion used to repay capital increases. 

Occupancy Agreement

In addition to the deed-of-sale, a notarial document (Occupancy Agreement) is established to frame the relationship between the member and Qurtuba. This document indicates, among others, the member’s share, Qurtuba’s share, the payment schedule, the amount and distribution between capital and the occupancy fees of the monthly payments.

Conversion of the member Shares

Once the purchase is finalized, Qurtuba converts the member’s class B shares into class A shares of equal value. Class A shares do not give right to dividends. Their purpose is only to trace the evolution of the payments.

Purchase and Property Expenses

All expenses related to the purchase of the property, including evaluation and inspection are the responsibility of the member. Notary fees and welcome taxes are shared: the member pays them when the property is purchased and the Qurtuba pays them when the property is transferred to the member. Property taxes and expenses are the responsibility of the member. They are deducted from the capital held by the member if Qurtuba makes an advance payment for the member. Monthly administrative fees are also required to the members occupying a home to manage their account and provide them with a periodic report.

Responsibilites during the purchasing process

During the purchasing processes, in no event shall the Qurtuba be liable, sued and/or held responsible for any direct, indirect, consequential or incidental damages or any other damages whatsoever, whether in connection with the negotiation, submission of an offer to purchase, conclusion of the deed of purchase and/or sale or any other act directly or indirectly related to the acquisition of the property. The Cooperative’s role is limited to financing the property; it does not intervene in the purchase process. Consequently, any fault committed in the process of purchasing the building is entirely attributable to the mandatary to the exclusion of the Cooperative, its employees, its president and its directors.

In view of the foregoing, the Purchasers and their Broker, the Sellers and their Broker and/or any other person involved in the process of acquiring the Property, waive all recourse against Qurtuba.  Any recourse against Qurtuba will be declared abusive.

Transfer of the Property

The member can accelerate the payment of the property without being penalized. When the value of the Class A shares held by the member equals the cost of the house at the time of purchase, the member may request the transfer of the property to their name. The occupying member acknowledges that the transfer of ownership of the property will be made without any legal guarantee of quality and at the occupying member’s risk.

Property Value Appreciation/Depreciation

The calculation of the capital gain/loss is done by comparing the municipal evaluation of the property at the time of purchase and its municipal value at the time of transfer to the member. If there has been an appreciation in the value of the property, the member will have to acquire class G shares at a cost equal to 10% of the gain. If the value of the property has depreciated, Qurtuba issues a payment equivalent to 10% of the depreciation. These amounts are capped at $15,000. This provision does not apply to occupancy agreements signed on or after July 1, 2022.

Selling the Property

A member must stay a minimum of one year before being able to sell the property. In the event of major financial problems resulting from chronic defaults, Qurtuba, with the authorization of the member, may proceed with the sale of the property. The member is responsible for the sales process. The properties are always solde without the legal warranty of quality and the notary is appointed by Qurtuba.

Appreciation/Depreciation in case of a sale

In the event of a sale, the calculation of capital gain/loss is done. The member receives 80% of the capital gain if he holds less than 50% of the capital, and 90% of the capital gain if he owns 50% or more. The amount is capped at $ 15,000. This maximum limit of $15,000 does not apply to properties where the occupancy agreement was signed on or after July 1, 2022.

Transfer by mortgage financing

The transfer by financing may be made at the request of the member after a period of two years from the date of the original acquisition of the property. The occupying member will be required to pay 20% of the difference between the municipal evaluation at the time of transfer and the evaluation at the time of purchase. The occupying member shall pay all taxes, fees and charges inherent in the transfer of the property. The transfer will be made without any legal guarantee of quality.

Moving a Mortgage to Qurtuba

Those who are already homeowners and wish to transfer their mortgage to Qurtuba will be listed separately. The eligibility criteria for these members are the same as for first time buyers. In addition, they must hold for at least six months a number of shares equivalent to a minimum of 5% of the balance of the mortgage. If the equity on the property exceeds 25% of its value, the member does not have to buy more shares. Otherwise, the member has to purchase more shares to reach the threshold of 25%. The members of this list are selected separately.

Shares Certificates

The cooperative issues certificates for Class B shares purchased by members in good standing. Certificates are not issued for dividends or for Class A or G shares.

B Shares Redemption

A member can redeem his class B shares at any time. With regard to class A shares, the member may resell them provided that his participation rate in the value of the property does not drop below 25% of the purchase price.

Tax Slips and Patronage Dividend Notices

Qurtuba issues tax slips to members who received dividends. A semi-annually patronage dividend notice is also provided.