A text from Insurance Bureau of Canada

To address various problems, the government made changes in 2018 that aim to better regulate co-ownership, including clarifying the roles and responsibilities of syndicates and the recourses they may take against co-owners.

Principle:

In the event of a loss, the syndicate is responsible for repairing the damage. If the syndicate files a claim with its insurer, it must pay the deductible under its policy. In addition, the risk that caused the damage may not be covered by the syndicate’s policy (absence of insurance) or the coverage limit may not be sufficient (insufficient insurance).

Before legislative changes in 2018

Before these changes, syndicates often claimed the deficit (deductible; absence of or insufficient insurance) from the co-owner in question, whether they were responsible or not, as the damage had originated in their unit. The co-owner could then use their insurance policy’s coverage to pay amounts claimed by their syndicate. Insurers had developed this type of coverage as a response to such syndicate claims.        

However, the payment granted under the coverage could only be applied to damage to the co-owner’s unit, not to damage to other units or common areas. 

Legislative changes of 2018

Since the legislative changes have come into force, a syndicate can no longer make a claim against a co-owner simply because damage originated in their unit,  even if a declaration of co-ownership provides for such claims. In fact, any provision of a declaration of co-ownership that allows a syndicate to make such claims is now considered invalid (paragraph 2 of article 1074.2 of the Civil Code of Québec).

Claim of a syndicate against a co-owner

In the event of a loss, a syndicate can make a claim against a co-owner if it believes that the latter is responsible for damage to their unit or to other parts of the building.

However, the syndicate is only entitled to claim the payment of its deductible or the amount of the damage not covered by its insurance (absence of or insufficient insurance), whether the syndicate files a claim with its insurer or not.

A situation like this one engages the co-owner’s civil liability. The syndicate may have to send the co-owner a formal notice indicating the amount claimed and the reasons for its claim.

Civil liability insurance: better protection for co-owners

Because a syndicate can sue a co-owner for damage that occurred in their unit or elsewhere in the building, insurers have added civil liability insurance coverage to co-ownership policies. It replaces the coverage that existed before 2018. 

The co-owner’s insurer will pay the syndicate if its investigation shows that the co-owner committed a civil wrong and that they are thus held liable. If the insurer refuses to pay, the syndicate can either split the deficit among all the co-owners or use its self-insurance fund to pay for the damage. The syndicate can then decide to sue the co-owner to recover the amount.

In summary

• A syndicate is ALWAYS responsible for repairing the damage in the event of a loss.
• It may take legal action against a co-owner it deems responsible for the amounts that its insurer has not or would not have paid (deductible, absence of or insufficient insurance).
• Legal action may never delay the repair of the damage, as the syndicate has the obligation to insure and preserve the building.

All these changes certainly call for adjustments to the practices of the various parties involved in settling co-ownership claims. However, in the long run, they will help to better protect co-owners and ensure that their units are kept in good condition.