Insurance of your condo: the evolution of article 1074.2 of the Civil code of Québec

Bill 141 (sections 636 to 653)

In 2018, the rules governing the insurance of your condominium were widely revised following the adoption of Bill 141. This reform was inspired by the work of committees dedicated to the reform of divided co-ownership insurance in Quebec since 2011, and more particularly by the need to review the sharing arrangements between the co-owners' insurers (for their private units) and those of the syndicate (for common areas).

In particular, this bill provides for the creation of a self-insurance fund intended to enable the union to pay in the short term the deductible provided for in its insurance policy in the event of a claim, which can sometimes be high and encourage the union to delay corrective work.

Certain important measures put forward in Bill 141 gradually came into force in 2020 after the necessary regulations have been adopted by the government.

Article 1074.2 of the Civil Code of Quebec

Other measures came into force on December 13, 2018, such as those provided for in article 1074.2 C.C.Q.

This article specifies that the amounts incurred by the syndicate to repair the damage following a disaster must be assessed with all the co-owners (thus ending the distribution agreements between the insurers, applicable only to the co-owners of private units damaged by the disaster).

It also provides that amounts not covered by the syndicate's insurance, such as the payment of a deductible, can be recovered from the faulty co-owner involved in a claim:

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.

Since its adoption, recent case law has applied article 1074.2 C.C.Q. in a few claims files - mostly water leaks involving co-owners and their syndicate. It appears that the syndicate’s recourse against a co-owner involved in a disaster will be more difficult.

Indeed, the sole custody of the property in question in the incident, due to its breakage or a defect (bathtub, water heater, fittings, etc.) is not sufficient to engage the responsibility of this co-owner or his tenant: a judgment of the Quebec Court of Appeal determined that the presumption of fault because of the custody of property (article 1465 CCQ) did not apply between a landlord and its tenant because their relationship is before any contractual, by virtue of their lease: by analogy, this extra-contractual regime which presumes a fault in the event of a claim related to the custody of property, will therefore not apply to the contractual relationship between a co-owner and his syndicate, the declaration of co-ownership also being a contract.

It is therefore important to verify that your declaration of co-ownership contains a clause similar to that of article 1465 C.C.Q., which will facilitate any action brought by the syndicate against a co-owner.

The subsequent amendment to article 1074.2 C.C.Q.

However, Bill 41, adopted on March 17, 2020, lightens the burden on the condo association. Article 1074.2 C.C.Q. thus modified, specifies that the co-owner's responsibility is also engaged in case of “damage caused by the fact or fault of another person or by the fact of the property in his custody”, thus putting an end to the refusals of insurers to compensate claims for this reason.

The entry into force of this modified article therefore allows the syndicate of your co-ownership to better assert its rights, for the benefit of all the co-owners, on the occasion of claims which may occur in the common and private areas of your building.

Questions relating to the law of divided co-ownership are often complex and they must be discussed and analyzed in detail before considering any legal action: we will be happy to assist you and meet you for this purpose.

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