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CO-OWNERSHIP INSURANCE: ARTICLE 1074.2

Assurance en copropriété : article 1074.2

Bill 141 was passed on June 13, 2018 and several of its provisions relating to condominium insurance came into effect last December. Among them Article 1074.2 is a bad surprise for syndicates of co-ownership, adding a new financial burden that is unforeseen and difficult to explain.


A nebulous genesis


The new condominium insurance measures were first introduced in Bill 150 and then transferred to Bill 141, to be passed urgently before the end of the last government's parliamentary duties. As a result, several formulations have changed between Bill 150 and Bill 141, without being subject to consultation or comments with stakeholders in the field of ​​co-ownerships.



Amongst these, Article 1074.2 was presented and adopted on 5 June 2018. The following new article was introduced:



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.

 

Any stipulation which is inconsistent with the provisions of the first paragraph is deemed unwritten.


This new provision was finally adopted, alongside the rest of Bill 141, on June 13. This is a radical change in the interpretation of the presumption of liability in the case of equipment owned by co-owners. This change completely unbalances the responsibilities and distribution of compensation between insurers of the syndicate of co-ownerships.


Heavy consequences for syndicate of co-ownerships


Without having been discussed during consultations, or with the various stakeholders before being filed, the almost instantaneous adoption of the law has grave financial consequences today. Indeed, in the past, co-owners had a presumption of liability for claims from their unit.



The new article 1074.2 does not prevent the syndicate from claiming the deductible from the co-owner of the unit where the claim occurred, but the insurers interpret it as canceling this presumption of liability. They now ask that the syndicate prove that the co-owner has indeed committed a fault in order to engage the co-owner's responsibility. In addition, the second paragraph states that:


"any stipulation which is inconsistent with the provisions of the first paragraph is deemed unwritten."



This removes any value from the conflicting provisions of the declaration of co-ownership.



This article is of no consequence for claims where it is possible to highlight the fault of the co-owner, but becomes major when the interpretation is less clear (for example the breakage of faucets, water heaters, and toilets).



In fact, since the coming into effect of this provision, the co-owners insurers in civil liability refuse to reimburse the syndicate for the deductible that the latter has paid to its insurer. The process has been complexified and the costs have increased for syndicates. Nevertheless, no counterparts exist to compensate for this new imbalance. Insurers have not adjusted their rates, recourses against faulty co-owners are not simplified.


Position and actions of the RGCQ


Section 1074.2 increases the financial burden for the syndicate of co-ownerships, without any obvious benefit, since the previous system worked. It is therefore a negative evolution.



As a result, in early March, the RGCQ sent to the Ministry of Finance and to the Ministry of Municipal Affairs and Housing recommendations on section 1074.2.



The response of these interlocutors was positive. We are confident that elected officials and public servants will be sensitive to this issue. The RGCQ intends to raise this issue during the consultations on Bill 16.