In my experience, the best advice you can give a condominium unit owner that is easy for him or her to follow has to do with insurance. The advice is two-fold. First, unit owners must carry insurance and, second, it should be with the same company that insures the condominium corporation.
I want to illustrate my point by telling you about a meeting I recently attended between a unit owner, the board of directors and its management team. At this meeting, there were numerous issues relating to repairs which needed to be done to the owner’s unit, and questions relating to the insurance coverage and the parties’ respective responsibilities. The unit owner and the corporation each had their own insurance adjuster with them at the meeting.
The unit owner had not been living in her unit for some time due to repairs that needed to be done to the unit. Her insurer had been paying her costs of living in a hotel. The repairs were taking longer than anyone was happy about and the end was just coming into view. There were disputes regarding whether the owner or the corporation’s insurer should bear responsibility for some of the items which needed repair as the Standard Unit By-law was not perfect. The unit owner’s relocation coverage was about to end since the dollar value of that coverage was limited and the owner had been out of her unit for quite some time.
As we sat at this meeting and tried to work out a time frame for completion of the work and who would do what in what order, I realized how easy it is when there are two different insurance companies for each of them to take the position that the other should cover the loss.
The unit owner’s adjuster turned to me as counsel for the condominium corporation at the end of the meeting and said, “our insured’s relocation coverage is almost finished. If the corporation does not complete the repairs quickly, we may look to your client for the costs”. I turned to the corporation’s adjuster and was able to say the following, “Since the corporation and the unit owner are insured by the same company, it does not matter to me which adjuster agrees to bear the expense because the same insurer is going to pay for it”. The adjusters knew immediately that there was no further reason to continue the discussion.
In other words, if both the corporation and the unit owner have the same insurer, there are no holes in coverage and it does not really matter whether the condominium corporation is acting as quickly as the owner would like, as there is no one to whom the insurer can look for coverage except itself. So many disputes can be avoided if both the unit owner and the corporation are insured by the same company.
I have been advised, although I cannot verify it, that only about 25% of all condominium unit owners actually carry insurance on their units and their personal possessions. This is a mistake.
All unit owners should carry insurance for the following reasons:
- Many condominium corporations are increasing the amounts of the insurance deductibles which apply under their policies. The unit owner can insure his or her responsibility for the deductible, which the corporation may claim from him or her;
- Many condominium corporations are enacting by-laws, in addition to the provisions in the Condominium Act, that make unit owners responsible for the deductibles in all circumstances except when the corporation has negligently caused the loss, even if the owner/resident may not have actually acted wilfully or negligently in causing a loss;
- Insurance can protect an owner for living costs if he or she has to relocate from his or her unit because of repairs which need to be carried out as a result of an insured loss;
- Special assessment coverage can be secured so that if a condominium corporation does not have adequate insurance for an insured loss it has suffered, and needs to levy a special assessment to make the necessary repairs, the owner can recover that special assessment under his or her insurance policy;
- If a unit is tenanted and the tenant cannot live in the unit because of repairs that need to be carried out due to an insured loss, the owner can insure the continuation of the rental income;
- A unit owner who negligently causes damage to another unit owner or that owner’s possessions may be liable for damages and the insurer will represent that owner, if legal action is commenced, and be responsible for the value of the losses that person may have suffered; and
- Every homeowner has personal possessions which can be damaged and/or destroyed. Many unit owners have made extensive improvements to their units. These things can be protected with insurance if an insured loss occurs.
In my experience, the best advice you can give a condominium corporation on insurance matters is that it have a good standard unit schedule or by-law. Unfortunately for those condominium corporations who received these as part of their turnover documents, we are starting to see that these schedules are not practical and do not provide the protection condominium corporations need. These developer-prepared standard unit schedules are usually the list of suite features that the developer offered to purchasers as part of their agreements of purchase and sale. They are often not compliant with the Condominium Act and include items which most condominium corporations do not want to insure, such as flooring, countertops and appliances. All condominium corporations that received a standard unit schedule from the developer after May 5, 2001, should review the schedule to see if it is suitable for the corporation. I recently reviewed one where the exterior features of a townhouse unit, including the deck, etc., were included in the standard unit definition.
The standard unit schedule can be corrected with a Standard Unit By-law and I recommend that if your corporation needs one, it be done as soon as possible.
- Many homeowners have reported major water damage to their homes as the result of cracked plastic nuts at the back of their toilets, and splits in the woven metal or polymer covering of the modern flexible hoses routinely installed today for the water supply to toilets. Check your toilets and ensure your hoses are marked with the CSA standard certification. If they are not, contact us for guidance on how to deal with this.
- The Condominium Act regulations provide that the maximum fee a corporation can charge for a status certificate is $100, inclusive of all applicable taxes. Miller Thomson LLP has contacted the government and asked it to consider whether this maximum amount will be changed now that the 13% Ontario HST must be applied when issuing status certificates.