Insurance Issues

July, 19 2017 Published by Toronto and Area Chapter - By Tony Seljak

Why We Need a Standard Unit By-law

From the Summer 2017 issue of the CCI Toronto Condovoice Magazine.

Living in a condo community has its challenges. Certain unfortunate events are simply impossible to foresee. For example, you cannot predict or control when a neighbour is going to plug his or her toilet and cause a flood that leaks into your unit.

When your unit is damaged by something like a flood, there are many factors which need to be considered by the condo corporation prior to them making repairs.

The condo corporation's property manager must first determine how the damage was caused. For example, was it from an owner's negligence or from a common element pipe? It is also important to estimate the cost of the damage. Other considerations include whether the damage is limited to one unit or multiple units.

There is no single correct way to address any given situation. Every case must be assessed based on its own facts. The responsibility to repair a unit after damage will depend on the specific language which is outlined in the condo corporation's Declaration and Bylaws – especially the Standard Unit By-law.

The Standard Unit-Bylaw describes in detail what is "standard" to a unit (as distinguished from an "improvement" to a unit). A "standard unit" typically refers to what the unit looked like when it was sold by the developer as part of the regular sales package. This may include the standard flooring (carpeting), tile, tub, countertop material, cabinetry, faucets, etc. which came with the unit. Condo corporations would be wise to pass a Standard Unit By-Law, if one is not currently in place. Passing such a by-law requires approval of 51% of the owners.

An "improvement" is any feature which is not part of the standard unit description. It is the responsibility of the condo corporation to obtain insurance covering the unimproved or "standard" unit which is also subject to a deductible. Insurance for any improvement to the unit is the responsibility of the owner.

In the case of a flood, for example, the Standard Unit By-law would help the corporation determine what it needs to repair. Section 89 of the Condominium Act, 1998 imposes an obligation on the condo corporation to repair both the units and the common elements after damage. This requirement is subject to the condo corporation's Declaration which may alter the condo corporation's obligations and which may impose an obligation on the unit owner to repair his or her unit after damage.

If a unit owner is at fault for a flood, for example, then they are responsible for repairing the damage for not only their unit but for the other affected units up to the amount of the condo corporation's insurance deductible. If the amount of damage is over the deductible limit, then the offending owner will be responsible to pay the deductible.

If the flood to the unit was caused by a common element pipe burst, then the corporation must make repairs according to the Standard Unit By-law.

If a condo corporation does not have a Standard Unit By-law, then it is responsible for repairing everything damaged in the unit, including any improvements, minus the contents.

To determine whether the condo corporation or the unit owner is responsible for repairing damage caused to a unit, it is important to look to the Condominium Act 1998 and the condo corporation's Declaration and By-laws. In most cases, the condo documents state that this determination is left to the board or property manager.

It is very important to have a properly drafted Standard Unit By-Law to determine the apportionment of insurance responsibility as between the condo corporation and owner. Without a Standard Unit By-law, the situation can become messy, as one or both of the insurance companies sometimes refuse to make repairs and the work to fix the unit is often unnecessarily delayed. A damaged unit is stressful enough as it is, so condo corporations should avoid adding to the stress and should implement a Standard Unit By-law.


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