Claims, specifically, water damage claims, are a real plague in co-ownerships. Water easily seeps in everywhere and creates considerable immediate damages which often involve more than one unit. The legislator has adopted several bills in the last few years to amend multiple articles of the Civil Code of Québec concerning the management of a claim in co-ownership.
Note: Bill 141 from 2018; Bill 16 having become effective January 10, 2020, as well as Bill 41 being effective March 17, 2020.
Regardless of the cause of the loss, the syndicate holds primary insurance, and the syndicate must take over the management of the loss if the risk is insured. Article 1073 of the Civil Code of Québec is clear.
In the case of a co-ownership composed of a large number of units, the syndicate’s deductible will necessarily be higher. A deductible is an amount of money which must be deducted from the amount of the indemnity to be paid by the insurance company. This deductible is paid directly by the insured following the loss.
Thus, insofar as the syndicate undertakes the management of the work following a loss, it may obtain the reimbursement of the costs up to the amount of its deductible and the compensation of the prejudice by the co-owner responsible according to the application of article 1074.2 of the Civil Code of Quebec.
1074.2. The sums incurred by the syndicate to pay the deductibles and make reparation for the injury caused to property in which the syndicate has an insurable interest may not be recovered from the co-owners otherwise than by their contribution for common expenses, subject to damages it can obtain from the co-owner bound to make reparation for the injury caused by the co-owner’s fault and, in the cases provided for in this Code, for the injury caused by the act, omission or fault of another person or by the act of things in the co-owner’s custody. (emphasis added)
Any stipulation which is inconsistent with the provisions of the first paragraph is deemed unwritten.
When it comes to determining who is responsible, we must look at the cause of the loss. Thus, the co-owner will be responsible for the loss when the cause of the damage is provided for in article 1074.2 of the Civil Code of Québec.
According to article 1073 of the Civil Code of Québec, the Syndicate is obliged to have a reasonable deductible, at the latest before June 13, 2021. The Syndicate may put in place preventive measures in order to identify the risks of loss which may affect the co-ownership, ex. water damage. Better to be safe than sorry! It is therefore recommended that the syndicates and managers make the co-owners aware of the risks of losses in the co-ownership and encourage behaviours which allow for a better control. For example, changing appliances that have exceeded their lifespan and turning off the water when the co-owners leave the unit for several days.
However, it is important to remember that the amount of the deductible for a syndicate can vary greatly from one syndicate to another. As mentioned above, the larger and older the co-ownership, the higher the deductible may be. Please also note that the government must establish by regulation the criteria for determining what constitutes a reasonable deductible. In addition, the concept of reasonable deductible is still to be interpreted by the Courts.
Costs involved
Expenses arising from a damage claim often include the following:
- Emergency response and repair costs
- Restoration costs for the private units and common areas
- Relocation and storage costs
- Insurance deductibles
- Management and legal fees
It is not the responsibility of the syndicate to assume the costs resulting from a loss when the cause of the loss is attributable to a co-owner, as described above. The co-owner’s civil liability is at stake and the co-owner must insure it.
Guidelines to follow
Guidelines to follow for any co-owner in order to facilitate a transparent and rapid management of the damage claim.
- Water leakage and/or infiltration: the co-owner contacts the emergency service of the syndicate (manager or custodial administrator) to notify them of the damage;
- The co-owner must ensure that someone is on the premises to allow access to the designated personnel;
- The syndicate (manager or director on duty) comes on site, if possible, with the plumber, finds the source, stops the flow, and lists the units affected by the damage by taking photos and collecting testimonies, in writing;
- The co-owner who is responsible for the loss must declare it to their civil liability insurer;
- The co-owner who receives the first (1st) formal notice from the syndicate to retain their responsibility must contact and declare the loss to their civil liability insurer;
- The insurer of the co-owner and/or the syndicate sends a claims adjuster to the premises to investigate the cause and evaluation of the damage;
- Regardless of the liability involved, the co-owner who has suffered damage to their movable property or private improvements must declare the loss to their insurer, as it is their insurance which covers this portion (or the tenant’s insurance for the movable property, if applicable)
- The co-owner must cooperate with the syndicate, the co-ownership insurer, as well as with their own insurer, if applicable, in order to provide access to their unit for the post-loss work;
- The work to repair the loss is carried out by the syndicate, except if, subject to the application of articles 1073 and 1074.1 of the Civil Code of Quebec, a co-owner is responsible for the loss and the damage is limited to their private portion;
- The work to repair the consequences of the loss is carried out;
It is important to remember that an efficient management of a disaster requires the deployment of rapid and efficient actions in order to limit the damage and repair and/or rebuild the building within a reasonable delay. A disaster that lasts for a long period of time can lead to the appearance of mold! This is to be avoided! It is essential to collaborate with the other parties involved and to keep proof of the events.