Bill 401, the Act mainly to improve the quality of buildings, the framework of divided co-ownership and the operation of the Régie du logement, which came into force in part in July 2018, has brought major changes to co-ownership, and particularly to insurance. Here are a few of them:
Liability insurance
The Bill modifies the syndicate’s obligation to take out insurance to cover its liability by including not only its liability to third parties, but also that of the members of its board of directors, its manager and the president and secretary in office at the general meeting of co-owners. While the law has particularly tightened the obligations of syndicates, it has not forgotten co-owners. When this provision comes into force, co-owners will have to comply with article 1064.1 of the Civil Code of Québec, which will require them to take out insurance covering their civil liability to third parties, the minimum amount of which will be determined by 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. Under these, the syndicate is no longer obliged to make a claim to the insurer and to avail itself of the insurance indemnity in the event of a loss. However, failure by the syndicate to file a claim with the insurer subsequently prevents it from exercising its recourse against the co-owner at fault, a person who is part of a co-owner’s home. The legislator has nevertheless mitigated this liability by stipulating that it does not apply if the amount of repairs to be carried out following the loss is no greater than the amount of the deductible. In this case, the syndicate can sue the owner for any damage caused by its own fault.
Improvements to private areas
Article 1073 of the Civil Code of Québec currently states that the syndicate has an insurable interest in the entire immovable, including the private portions, with the exception of improvements made to these private portions. Following the amendment of this article, “when they can be identified” will be added, which will reverse the burden of proving the presence of improvements, since it will be presumed that no improvements have been made to the private portions. This will make it more difficult for co-owners to claim compensation from their insurer for these improvements. In order to properly identify improvements to the private portions made by a co-owner, the third paragraph of article 1070 C.c.Q will soon come into force, requiring the syndicate to keep a register of improvements made to the private portions. This will make it easier to identify improvements made by co-owners to their units. That’s why it’s so important for syndicates to quickly set up a register of improvements to private portions.
By Marie-Chantal Dubé