Definition : Insurance - Reference unit

June 28th, 2020 - The law concerning co-ownership insurance has undergone major changes since June 2018.  Section 1070 of the Civil Code of Quebec now contains a third paragraph, which provides that the syndicate keeps a sufficiently precise description of the private portions available to the co-owners, for insurance purposes, so that the improvements made by the co-owners are identifiable. The same description may apply to several portions when they have the same characteristics.   

Expenses related to the maintenance and administration of the common portions of a co-ownerships start from its constitution as a legal person. It is therefore necessary that each co-ownership sets up, upon publication of the declaration of co-ownership, a Board of Directors to administer it. This board of directors is the executive body of the syndicate and its legal representative. Its members act as the mandataries of the syndicate. To ensure the star up of the syndicate, the developer usually designates in the declaration of co-ownership (by-laws of the immovable), one of its representatives to act as the interim director of the syndicate. His role is to accompany the co-owners, manage the co-ownership and see to the organization of the special transition meeting to elect the new directors to constitute the board of directors.

Bill 41 came into force on March 17, 2020. It creates a new obligation for any syndicate of co-owners formed before June 13, 2018 (the date of the publication of the declaration of co-ownership), namely the production and adoption, before June 13, 2020, of a description comprising one or more private reference parties. However, some syndicates have neglected to do so. Nevertheless, there is still time (for them) to rectify this situation. Those who do not yet have this description of the private parties have a good interest in getting into it as soon as possible, otherwise the consequences could be severe, not only for a syndicate, but also for the civil liability of the directors. Consult the practical sheet Who has to insure the improvements made to private portion? to learn more about this subject.   

When you want to buy a condo, there are important checks to do and documents to obtain. One of the main checks is to know the financial health of the syndicate. This information must be complete and transparent. If the co-ownership has been poorly managed, you could find yourself paying significant special contributions that could put you in a precarious situation. That is why we need to collect as much information as possible. Thus, you will limit the financial risks associated with your acquisition. In principle, the syndicate's board of directors.should provide relevant documentation and information on this subject.

In your eagerness to finalize your offer to purchase, you may forget to ask the co-owner-seller if, over time, work has been carried out in the apartment. Yet, this question is of the utmost importance as it will allow you to ensure, as the case may be, that it has been executed correctly and legally. Also, it is required to refer to the declaration of co-ownership to know the rules that apply in this matter. Remember that when the work touches the common portions, it requires authorization. And sometimes even in a private portion, the declaration of co-ownership can impose constraints.

The Law and the overwhelming majority of declarations of co-ownership require that syndicates of co-owners insure their building. This may seem surprising at first glance as the syndicate does not own the private portions nor the common portions. However, its main object is to ensure the preservation and the longevity of the building and to manage and administer it diligently following rules of the trade. This is why the legislator has given to the syndicate an insurable interest and has made it compulsory that it subscribe building insurance.  

The insurance of the syndicate covers the common portions of the immovable, as well as your private portion. In the event of a loss, it will not cover you for the improvements made to your private portion. It is your responsibility, therefore, to ensure that these improvements are adequately, by the means of an individual insurance. This is generally the case, if renovations have been carried out with material of a higher quality than the original one. Your insurance policy must cover the value of the improvements you have made yourself, as well as those made by previous co-owners.  

The rules for voting in meeting of co-owners vary depending on the importance of the decision to be made. They require a complex calculations in order to determine whether a the required majority has been reached. To do so, you must make sure that the register of co-owners is up to date, and that the compilation of votes is done according to the relative value specific to each fraction. This reduces the risk of contestation of an adopted resolution. That said, some decisions have extremely important consequences for all co-owners so the requirements in terms of majorities are then higher. For this reason, the law essentially imposes four levels of majority: absolute, enhanced, double.