Who is responsible for repairing hardwood floors in a unit that has sustained water damage and whose insurance will be responsible for the loss? Can you clearly and easily answer that question? In addition to examining the declaration and the Condominium Act, a condo corporation should have a bylaw that defines a standard unit. Doing so will help answer that question, and clarify other obscurities that arise when items in a unit are damaged.
In a properly drafted standard unit bylaw, the distinction between a unit and an improvement is legally defined. When the corporation is obligated to repair after damage, the obligation extends only up to the standard unit. Corporations are not responsible for repairing improvements; rather, this is the responsibility of the owner. Many condos have implemented standard unit bylaws to define what is included in a standard unit, but many condos have not done so.
Regarding insurance, the standard unit bylaw defines how much a unit will be repaired as a result of an insurable loss by the corporation’s insurance and what is the responsibility of the owner’s insurance.
Insurance companies like to see standard unit bylaws. They provide clarity and certainty regarding the risks the insurance company is assuming. Having one may make an insurance company more comfortable extending insurance coverage and may also help in managing your deductibles and premiums.
Those who have not passed a standard unit bylaw are placing a heavy burden on the corporation’s insurance to repair an insurable loss. Creating one, however, will shift the responsibility for certain items to the owner’s insurance. Insurance professionals have been advising that it is much cheaper for an owner to obtain insurance for certain types of items in the unit, as opposed to the corporation. As such, it is important to determine what items make sense to keep as part of the standard unit and what items should be removed from the definition and thereby become an improvement.
For those who have a standard unit bylaw, do not rest on your laurels. It would be prudent in this condo insurance market to revisit your standard unit definition and determine if it needs revision. A definition that made sense five years ago may no longer make economic sense in today’s insurance market. At the very least, review the standard unit definition with your insurance company and lawyer to determine if changes can improve your premiums, deductibles or ability to obtain insurance coverage.
Sonja Hodis is a condominium lawyer based in Barrie that practices condominium law in Ontario. Sonja can be reached at (705) 737-4403, email@example.com or you can visit her website at www.hodislaw.com.