BILL 401 AND ITS IMPACT ON CO-OWNERSHIP INSURANCE

Bill No.401, namely the Act mainly to improve the quality of buildings, the regulation of divided co-ownership and the operation of the Régie du logement, which came into effect in July 2018, brought significant changes to the law of co-ownership, especially in the field of insurance. Here are a few of them:

Liability insurance

The Act modifies the syndicate’s obligation to obtain insurance not only insuring against its own liability to third parties, but also insuring against the liability of its board of directors, its manager and the president and the secretary in office at the General Meetings of the co-owners.

While the Act increases the obligations of a syndicate its does not disregards the co-owners. Indeed, upon this disposition coming into force, the co-owners will have to comply with Article 1064.1 of the Civil Code of Quebec, which will oblige the co-owners to obtain third party liability insurance for minimum amount to be determined by government regulation.

Insurance indemnity

Two new articles came into force in December 2018, namely Articles 1074.1 and 1074.2 of the Civil Code of Québec. Pursuant to these terms, the syndicate is no longer obligated make a claim under its insurance policy in the event of a claim. However, the syndicate’s failure to make any claim to the insurer subsequently prevents it from exercising its remedies against the offending co-owner, a person who is a member of the co-owner’s household or a person in respect of whom the syndicate is required into an insurance contract to cover the person’s liability. The syndicate will be required to perform all required work with dispatch. The legislator has nevertheless lessened this responsibility by stipulating that it does not apply if the amount of the repairs to be made following the incident is not greater than the amount of the insurance deductible. In this case, the syndicate may sue the co-owner for any damage caused by his own fault.

Improvements made to the private portions

Article 1073 of the Civil Code of Québec currently provides that the syndicate has an insurable interest in the entire building, including the private portions, with the exception, however, of improvements made to those portions. Upon the amendment of this article, the words “where they can be identified” will be added, which will reverse the burden of proving improvements have been made, since it will be presumed that no improvements have been made to the private portions. It will then be more difficult for co-owners to claim an indemnity from their insurer for such improvements.

In order to clearly identify the improvements to the units made by a co-owner, the third paragraph of Article 1070 of the Civil code of Québec will soon come into force and will impose upon the syndicate an obligation to keep records of the improvements made by co-owners to their private portions. Indeed, this will make it easier to identify improvements. Therefore, it is important for syndicates to expeditiously create a register of improvements to private portions.

By Marie-Chantal Dubé