April 15, 2020 — The Government of Quebec published in the Official Gazette of Quebec, on April 15 2020, a regulation on divided co-ownership insurance, which clarifies the terms and dates of entry into force of some of the provisions introduced by Bill 141, in June 2018. This bill provided that six of the elements contained in it would be passed by government regulation. For the time being, only four are touched by this regulation.
The reconstruction cost
With this regulation, section 1073 of the Quebec Civil Code will require the syndicate to take out insurance covering the "reconstruction cost" of the building. This is the amount that would have to be paid to rebuild the entire building, in the event of a total loss, regardless of its state of dilapidation. Article 3 of the Regulation will take effect on April 15, 2021.
Only members of the Quebec Order of Chartered Appraiser will be able to assess the amount of property insurance required for a syndicate, in order to cover the building. Article 3 of the Regulation will take effect on April 15, 2021.
Section 4 of the Regulation provides a comprehensive list of the risks covered "as of right" in an insurance contract, including theft, fire, lightning, hail, explosion or vandalism. Water damage must also be covered. These are defined as "leaks and overflows of sanitary facilities and appliances connected to the water installation lines inside the building."
Not all syndicates will necessarily take out all of these protections, with the difference that from now on, an insurance contract will have to specify the coverage that is excluded from it. This will also come into effect on April 15, 2021.
The creation of the Self-Insurance Fund is one of the cornerstones of the new legislation in Bill 141. It will become mandatory on April 15, 2022, 24 months after the date of publication of the regulations associated with it. The syndicate of co-owners must therefore have it set up in the next two years.
This fund will have to match the highest deductible (Article 2 of the Regulation), of all insurance coverages underwritten by a syndicate. It should be noted that for the purpose of this calculation, deductibles for earthquakes and floods will not be considered.
On the other hand, if this fund were to be used (during its capitalization), and more than half of its value were to be removed, the syndicate would have two years to refund it. But if the amount levied is less than half the total amount to be capitalized, the grace period to bail it out would be one year.
Compulsory insurance for any co-owner
The Regulation provides, in Section 1, that the minimum amount of civil liability insurance that a co-owner must hold will be $1 million, if the building has less than 13 fractions used or that can be used as a housing unit or for the operation of a business. The minimum amount will be $2 million if the building has 13 or more units. This article will take effect on October 15, 2020.
It should be noted that in calculating the number of fractions, for example, fractions whose destination is for parking purposes are not taken into account.
Overall, these adopted provisions respond to the recommendations made by the Regroupement des gestionnaires et copropriétaires du Québec (RGCQ), with the exception of the reasonable deductible and substantial loss provisions, which are not on the menu of this regulation.
To see more about this regulation, click on this hyperlink..
By Me Yves Joli-Coeur for Condolegal.com
Montreal, April 15, 2020