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Condos Have More Time Before Changes to Insurance Regime

Much ink has been spilled in the last few months over the upcoming changes to the insurance regime applicable to condominiums. In particular, a lot has been written about existing Insurance deductible by-laws and any looming deadline to re-arrange your corporation’s affairs on this front.  Well, we may all have more time to breathe…

Help us get an accurate picture of how the condo world is coping with insurance challenges by taking our short survey. It may be best (but not entirely necessary) for you to have in hand your most recent insurance certificate if you want to be able to answer all questions.

Changes to Insurance and Repair Obligations

We’ve already blogged on the important and sweeping changes expected to affect who is responsible to repair units after damage.  In a nutshell, the existing Condo Act provides that owners are responsible to maintain the unit and corporations are responsible to repair the unit after damage (up to the “standard unit” and subject to your declaration and any insurance deductible).

The “new” Condo Act is expected to change this. Indeed, the new version of section 89 provides that owners will be responsible to repair a unit after damage (unless the Declaration provides otherwise).  We are of the view that this (and other related changes) are a great opportunity for condominium corporations to review their governing documents and make the required changes to fall under this new insurance regime.

What About the Insurance Deductible?

Another change that is coming down the pike affects section 105 of the Act.  This section imposes on corporations the cost of the insurance deductible  except when the damage is limited to a single unit in cases where the owner (or someone they are responsible for) caused the damage to their unit.

Under the old version of the Act, corporations were also able to pass by-law extending the circumstances under which the deductible could be shifted onto the owner. This was a tremendously useful tool to better manage the corporation’s claims history.  The new version of the Act removed the ability to pass such by-laws. It is expected that such a shift of the deductible onto owners will only be available through an amendment to the declaration.

We now have every reason to expect that existing Insurance Deductible by-laws to be grandfathered.

When Does this Come into Force?

Many were left to wonder whether the changes to section 105 would be implemented as early as July 1st, 2017.  This created a certain level of discomfort amongst many in the industry.

The Ministry of Government and Consumer services has reached out to stakeholders today to clarify the ministry’s plans with respect to the amendments to section 105 of the Condo Act.

As you know, the new Condo Act (and its regulations) will be rolled out in phases. While we expect the first phase to be rolled out as early as July 1st, 2017 (on this see our earlier blog). Today, the ministry confirmed that they currently are not planning on rolling out section 105 of the Condo Act with this first proposed wave of regulations.  Section 105, and any potential transition rules, are planned to be part of later phases of regulation development and consultation.

This will give many more time to breathe.  But don’t fall asleep at the wheel. Now is the time to ask your legal adviser to review your governing documents to determine how you can best benefit from these changes.