Advantages Condo

According to the report of the Advisory Committee on the co-ownership the latter has found during the public hearings the phenomenon of inflationary insurance franchises of the co-ownership syndicates. It was reported to the Committee that in some cases, after a few accidents caused by water affecting the dwelling of the co-ownership, the insurance deductible of the syndicate was increased to a higher amount. There was a report of an increased insurance deductible of close to $ 100,000 for each case of water damage.

We remind you that under Section 1073 of the C.c.Q, the syndicate is required to obtain insurance for an amount equal to the replacement value covering the entire building, excluding improvements made to the privative portions. When the insurance is properly subscribed under this legal obligation the insurable value must match the current value of the property, plus any costs that would be associated with the reconstruction of it. The insurance that the syndicate must subscribe to must cover it for its full responsibility for third parties, including the co-owners.

According to the Committee, by foreseeing the practice of large deductibles of up to several thousands of dollars, insurers force the syndicate of the co-ownership to subscribe to insurance that does not comply with the spirit of the insurance law.

The Committee also noted that, for insurers, deductibles are necessary because they allow to exclude a certain number of accidents. However, when the damage caused by the loss exceeds the deductible, the insurer shall compensate the syndicate for the excess of the deductible. That is when it is up to the syndicate's responsibility to collect the franchise of the co-owner at fault, if any, which could make him responsible. However, these franchises also exclude a certain number of accidents for which no co-owner is at fault (e.g. water damage caused by a common portion under the responsibility of the syndicate).

The Committee expressed the view that it would be necessary to find a just balance between the concerns of the insurers, the spirit of the law, and the fact that the co-owners are somehow “insured” ultimately targeted by the police of the insurance, or by people of the “house of the insured, the syndicate.”

In light of this reality, the Committee stated that it was in favor of recommending the adoption in Quebec of the concept of “the reasonable franchise” developed by the Ontario co-ownership legislation.1

We want to emphasize to you that all the recommendations of this committee will have to be studied in detail by the Minister of Justice of Quebec, and if they are selected, they will follow the usual path of any change in law before receiving final approval of the National Assembly for it to take effect.

We invite you to contact our team of lawyers specialized in real-estate law for any question about this topic.