“War is peace. Freedom is slavery. Ignorance is strength.” If reading the Repair, Maintenance and Insurance sections of the Ontario Condominium Act and related sections of a condo Declaration and By Law is reminiscent of the contradictions in this iconic quote from George Orwell’s dystopian novel 1984, take heart in knowing you are not alone! 

While the main goal of INGSOC’s party slogan in the novel was to distort language and meaning, the authors of the Act certainly didn’t intend to doublespeak but it sure does feel like it!

I will spare you the unschooled lesson in literature; it was never my strongest subject. I, however have spent the most part of a 21 year insurance career dealing almost exclusively in Condominium Insurance and can attest to the tangled web many owners, property managers, and insurance professionals find themselves in while navigating Standard Unit Definitions and By Laws as they relate to insurance and maintenance obligations.  

So, what is a Standard Unit Definition and Standard Unit By Law, and what purpose do they serve? The intent of the Standard Unit Definition is to provide owners and the corporation guidance on which components they are responsible for with respect to Repair, Maintenance, and Insurance, when damage occurs within the unit boundaries of a Standard condominium corporation. A Standard Unit By Law is one avenue a corporation can use to implement or change its Standard Unit Definition.

For day-to-day repair and maintenance obligations that are not the subject of insurance, Section 89 (1) of the Act requires the corporation to repair the units and common elements after damage. However, Section 89 (2) states that this obligation shall not include Improvements made to a unit. The corporation may, as they often do, change this obligation to make the owner responsible for day to day repair and maintenance of their unit.   Similarly, for insurable damage, Section 99(1) requires the corporation to insure the units and common elements after insurable damage, however, Improvements are NOT part of this obligation. It therefore becomes necessary to clearly define what is anImprovement in this context.

Contrary to the dictionary definition, an Improvement in the context of the language used in the Ontario Condominium Act of 1998 and Declarations of corporations, is anything within the unit boundaries that falls outside the Standard Unit Definition once the corporation has included this definition in its Declaration or Standard Unit By Law.  A Betterment is a change made or acquired by an owner, above and beyond the Standard Unit, for example if an owner purchases a unit and rips out hardwood flooring that the previous owner had installed and replaces it with marble floors. The unit owner has the obligation to repair, maintain, and insure the Improvements and Betterments.   Note that Common Element and Vacant Land Condos do not have Standard Unit Definitions, and subsequently, no Improvements and Betterments. Repair and maintenance obligations for these units are defined in the Repair and Maintenance sections of the Declaration, and owners of these types of condos are expected to insure their units for the full replacement value, similar to a typical home insurance policy. However, as with Standard Condominium units, it is important for the insurance policies obtained by the owners to include coverage for Deductible Chargebacks, and insurable Loss Assessments ( not to be confused with special assessments for budgetary shortfalls or similar issues) that the corporation can legally pass to the owners.  

Some benefits of a clearly defined Standard Unit Definition include:

• Clear guidance on what parts of the unit the corporation and unit owner are responsible for when insurable damage occurs and for daily repair and maintenance 
• Makes the claims process quicker and less combative 
• Creates a fair and equal approach to handling insurable losses
• Makes it easier to resolve disputes relating to insured losses 
• The corporation has a clear description of what it needs to appraise and insure with respect to its obligation to insure the Standard Units

Unfortunately, many corporations especially those registered prior to 2001 when the Act formally became law, do not have a Standard Definition and often find it difficult to pass a Standard Unit By Law, given the requirement that 50% plus 1 of owners must vote in favor for it to pass. For these corporations, insurable losses can be challenging and frustrating to navigate as each party and their insurer try to figure out their respective responsibilities. 

So, what can a corporation do, in the event that it doesn’t have a Standard Unit Definition, or if the one in place is unclear or does not meet the needs of the community? Section 56(1) of the Act allows the board to make, amend or repeal by-laws. Prior to doing this, it is highly beneficial to hold information sessions for owners that include a condo lawyer and an insurance professional to help owners understand the importance of a clearly defined Standard Unit Definition, and to address questions and concerns, in advance of a vote. 

Please note, this blog post does not constitute legal advice. Always consult with a qualified Condominium Lawyer to help navigate all matters relating to legal obligations of your condominium corporation. 

David Outa BA,CIP,CRM,LCCI

Condominium Practice Leader

Cowan Insurance Group

Even if you are not a fan of Shakespeare, we all know the famous line spoken by Hamlet; “To be or not to be, that is the question: Whether ‘tis nobler in the mind to suffer the slings and arrows of outrageous fortune, or to take arms against a sea of troubles.” While this line may not appear to apply to the world of condominiums, on a second reading it rings true
when thinking about chargebacks. Recent caselaw, such as Peel Standard C.C. No. 779 v. Rahman, 2023 ONSC 3758 and Amlani v. York C.C. No. 473, 2020 ONSC 5090, seem to stand for the proposition that certain chargebacks may not be valid. This has left lawyers, property managers, and boards asking, “to chargeback or not to chargeback”. Will a chargeback lead to fortune (or more appropriately – indemnification) or lead to what Hamlet spoke of, “… a sea of troubles”?

The issue of chargebacks (or in other words, claims for indemnification by a condominium from a particular unit owner) arise on a daily basis in condominium living. Most often the issue arises when an owner or occupant of a unit damages the common elements, or breaches the declaration, by-laws, or rules and the condominium is required to expend funds
rectifying the damage or enforcing its governing documents. As condominiums do not have revenue, like a business corporation may have, the funds expended by a condominium in addressing these issues come in the form of common expenses from all owners – even those who had nothing to do with the damage caused or the rules broken. This may seem
unfair. Why should all the other innocent owners be required to foot the bill for the issues caused by one? This leads to the question Hamlet may have posed if he had lived in a condominium, “to chargeback or not to chargeback?”

In this article, we will break down chargebacks into three categories, being:

1. Chargebacks outlined in the Condominium Act, 1998
2. Chargebacks outlined in a condominium’s governing documents
3. Enforcement costs chargebacks

i. The Condominium Act, 1998

The Condominium Act, 1998, S.O. 1998, c. 19 (the “Act”) is the overarching legislation that governs all condominiums in Ontario. Sections 84 through 88 of the Act set out the obligations and responsibilities for all owners to contribute to the common expenses and addresses situations where an owner fails to contribute. Section 84(3) of the Act requires all owners to contribute, regardless of whether that owner has waived their rights to use the common elements or is making a claim against the condominium. Where an owner fails to contribute, section 85 of the Act provides that the condominium has a super-priority lien against the defaulting owner’s unit which can be enforced the same way as a mortgage. This is a powerful tool which recognizes that it is unfair for innocent unit owners to have to make up for one owner’s failure to contribute.

What then when an owner causes issues the condominium is required to expend funds to rectify and that may not be included in the monthly common element payments? The Act provides that in certain circumstances a condominium can charge back additional costs to owners and collect those costs as if they were monthly common element payments. For
example, section 92 of the Act addresses situations whereby an owner fails to undertake their maintenance or repair responsibilities. Under section 92 of the Act, where an owner has an obligation to maintain or repair their unit or portions of the common elements and fails to do so, a condominium may undertake repairs or maintenance on behalf of the owner. Section 92(4) of the Act then provides that the costs incurred by the condominium in this scenario can be added to the common expenses payable for the owner’s unit.

In the next part of this series, we’ll dive into the other two categories of chargebacks: those
outlined in the condominium’s governing documents and chargebacks for enforcement
costs. We’ll also discuss recent caselaw and how to approach these situations in practice.

Stay tuned!

*The content of this article is intended to provide a general guide to the subject matter and is
not legal advice. Specialized legal advice should be sought regarding your specific
circumstance.

Written by: Chris Mendes, Condominium Lawyer

A short list of the most expensive, unexpected condo corporation expenses will invariably include floods. Although flooding is an insurable loss, the impact of making insurance claims means that claims are only made in extreme cases. Often, the repair costs, which can easily range from thousands to tens of thousands of dollars, are shouldered by the corporation (i.e., the owners through payment of common expenses).

So, what can a corporation do to mitigate this risk? Several years ago, our board implemented some technology that has helped us keep flood damage costs in check Since I joined our board, it has proven to be one of the best investments we’ve made in our building.

The project started with the goal of addressing a completely different challenge. We suspected we were paying for a lot of water going down the drain due to leaky toilets. However, we had no way to quantify the scale of the problem or measure the effectiveness of any possible remediation plans.

A local startup that has matured into a well-recognized player in the industry had exactly what we needed. Alert Labs provided us with two wireless water meter readers. They strap onto a standard water meter and can read it without requiring any wiring. They are very low-power units. Our batteries lasted several years before needing to be replaced.

The magic of this system is that it tracks water usage by the minute and uses software to analyze the usage patterns to estimate how much water is leaking out of the system at any given time. Key to this analysis is that most residential buildings should have periods in the early morning hours with zero water usage.

An unexpected benefit of adopting this system was that we could very cost-effectively add flood sensors to mechanical rooms and washrooms throughout our building. The key to limiting damage from leaks is being able to react quickly when a leak starts. To do that, you need to know you have a leak. We have cleaning staff on-site six days a week who check washrooms and mechanical areas daily to ensure everything is okay. However, this means if a leak develops, it could continue undetected for hours.

The flood sensors are small wireless “pucks” that can be left on the floor anywhere in our building. If they get wet, they immediately trigger email or text messages to whomever has been set up to receive alerts.

In the three years we’ve had the system in place, we have had at least five situations where the flood monitoring has turned what could have been a major event into a minor inconvenience. In two of those cases, the weekend timing was such that we could easily have had 36 hours of water pouring into our basement area before anyone would have noticed it. We also had two significant floods on the fifth floor, which could have been extremely damaging had they not been caught and addressed quickly.

The flow monitoring system has also twice alerted us to a problem with our cooling tower that led to the system continuously dumping water down the drain from a wide-open feed valve. While there was no risk of flood damage in these cases, this is the type of major leak down the drain that could have continued for weeks or even months without anyone noticing. Catching and repairing these issues quickly undoubtedly saved us thousands of dollars.

Our entire system only cost a few thousand dollars. It’s simple and easy to manage and maintain. Since part of the goal of the implementation was water savings, our regional government even covered part of the cost with a water-saving grant. There is an annual monitoring fee of just a few hundred dollars.

We haven’t expanded the system beyond what we initially installed, but we could add more flood sensors for $150 a piece. The ten sensors we have cover all the common areas we are responsible for, but we are considering a program to allow owners to purchase flood monitors for use in their units. Significant unit floods often quickly leak into units below and can go undetected for some time if residents are not home. This would be a little more complicated to manage, but as units are sometimes the source of floods, it would add another level of protection for the corporation as well as the owners who participated.

Another potential enhancement is that the system can automatically shut the water off if a leak is detected, which may be appropriate in some situations.

Based on our years of experience, I can’t imagine running a large condo building without this equipment. It is cheap insurance that paid for itself in less than a year.

Written by: John Hayes, Director, CCI GRC