Bill 141: What has changed for condo owners?

Enacted in 2018, Bill 141 has had a significant impact on condo insurance.

The new obligations on condo associations have direct consequences on condo owners, particularly when submitting an insurance claim.

Description of Private Portions

The condo association is obligated to compile a description of each unit as is. This will serve as a reference tool and make it easy to identify all improvements made by the owner.

Condo owners who wish to renovate or improve their condos must inform the syndicate of their plans prior to beginning the work, in case it impacts any elements included in the description of private portions established by the syndicate. Even if the improvements are to those made in the past, the Declaration of Co-ownership may also require that the syndicate be notified. The goal of this notice would be to maintain a descriptions register that would allow to distinguish between private portions and improvements. It’s best to keep all invoices and receipts to be able to assess the value of the work done.

What this means for condo owners

When a condo owner upgrades a laminate countertop to quartz, it’s his or her insurer who will cover this improvement. The condo association’s insurer will cover what was included in the reference description only, in this case the laminate.

In the absence of a reference description of private portions, the condo association’s insurer must cover the improvements. The underlying risk here is that the condo association will fail to take out sufficient insurance based on potential improvements made by condo owners. In this situation, condo owners would be penalized, as in the event of a total loss, they would all have to pay their share for the condo association’s lack of insurance.

Fair Insurance Amount and Reasonable Deductible

The condo association must take out enough coverage to rebuild the building as is.

This means that a property assessment must be conducted at least every five years by a member of the Ordre des évaluateurs agréés du Québec (OEAQ).

The insurance contract must also include a deductible that is deemed reasonable by all parties. In the event of a claim, the association should be able to pay the deductible.

What this means for condo owners

Insufficient insurance amounts, deductibles and lack of insurance are now considered as fees by the condo association.

When the insurance amount is insufficient or the deductible is too high:

• The condo owners must pay what the insurer does not.
• Damage not covered by the condo association’s insurance policy that affects the building and units (excluding improvements) will be divided and paid for by the condo owners, even those who do not suffer any damage.
• A condo owner whose insurer will not cover his or her share of the deductible required by the condo association’s insurer will be obligated to pay for it out of pocket.

Condo owners will be entitled to claim these special contributions from their home insurer as long as they are insured for this type of loss.

Self-Insurance Fund

Condo associations will have to set up a self-insurance fund in addition to their contingency and operating funds.

The purpose of this fund is to pay deductibles in the event of a claim. It will also cover insufficient insurance amounts or lack of coverage by the condo association.

What this means for condo owners

Condo fees will increase.

Individual condo owners are obligated to pay their share of expenses for repairs not covered by the condo association in the event that the self-insurance fund falls short.

Damage from Your Negligence

The condo association can sue a condo owner for damage to the building and adjacent units caused by his or her negligence.

In this case, it’s the condo owners’ civil liability coverage, in their home insurance contract, that will reimburse the expenses claimed by the condo association (or from the lawsuit).

Note: This blog post is provided for information purposes only. It is not a substitute for professional legal, financial or fiscal advice. For advice specific to your personal situation, always speak with your advisor. SSQ Insurance cannot be held responsible for any decision made as a result of reading this blog post.