Divided co-ownership, an increasingly popular form of property ownership in Québec, is based on a specific legal structure that comes with rights and responsibilities for both the co-owners and syndicates of co-owners. Among these responsibilities are the critically important, but often overlooked, obligations related to insurance coverage. Both the syndicates and individual co-owners are required to carry specific insurance coverage to comply with the law and protect themselves against various risks, such as water damage and fire.
Mandatory insurance for the syndicate of co-owners
The Civil Code of Québec provides that the syndicate has an insurance interest in the whole immovable, including the private portions.
It must take out property insurance on the whole of the property, including the private portions (except improvements made by a co-owner) and the common portions. Since April 15, 2021, the insurance contract entered into by a syndicate must cover, by operation of law, at least the following risks, as set out by government regulation:
A syndicate of co-owners must take out the following insurance policies:
At no time may the syndicate or co-owners decide to opt out of these insurance policies.
In addition, to ensure it can cover the deductibles set out in the various insurance policies it holds and to be able to pay any amounts not covered by the insurer in the event of a loss, the syndicate is now required to establish a self-insurance fund that is liquid and available on short notice.
Mandatory insurance for the co-owner
The Civil Code of Québec also sets out obligations for the co-owner, who is required to take out third person liability insurance, the minimum compulsory amount of which is determined by government regulation. This minimum amount is $1 million if the property has fewer than 13 fractions used or capable of being used as a housing unit or for carrying out a business, or $2 million if the property has 13 or more fractions.
Although it is not mandatory, it is recommended that co-owners take out additional insurance coverage, such as insurance covering improvements made to the private portion (flooring, custom cabinetry, etc.) and movable property.
The role of the real estate broker in a co-ownership transaction
The real estate broker acts as a trusted professional during a transaction, and their duties to verify, inform and advise are especially important in the context of co-ownership transactions.
The seller’s broker must:
The buyer’s broker must also obtain a copy of the insurance policies, ensure that all required coverage has been obtained in accordance with the syndicate’s legal obligations, and obtain the information related to the self-insurance fund. The broker must also inform and advise the buyer accordingly, for instance, by informing them that they must obtain civil liability insurance and recommending additional coverage, if needed. If the buyer requires advice regarding insurance, the broker must refer them to a qualified insurance professional.
Conclusion
Divided co-ownership involves a sharing of responsibilities between co-owners and the syndicate. When it comes to insurance, this division must be clearly understood and well managed to avoid unpleasant surprises in the event of a loss. Co-owners must protect their personal property and liability, while the syndicate is responsible for maintaining adequate coverage for the entire immovable. In an increasingly complex real estate market, understanding the insurance issues related to co-ownership is an essential asset for all stakeholders.
RE/MAX is a network of real estate brokers specializing in the sale, purchase and rental of divided co-ownerships throughout Québec. These professionals are able to obtain and review all documentation relevant to the transaction and advise you accordingly. Furthermore, brokers affiliated with RE/MAX’s Coproprié-T program have access to an exclusive training program called Coproprié-T, which has been specially designed for co-ownership. This training allows them to maintain high quality service standards for transactions involving divided co-ownerships.
Good to know! Looking for the assistance of a qualified professional for renting out your condominium? Look for a broker affiliated with the Coproprié-T program on the RE/MAX website! https://www.remax-quebec.com/en/real-estate-brokers
Me Julie Smythe, MBA
Legal Affairs Director
RE/MAX Québec
https://www.remax-quebec.com
For the list of our Coproprie-T Affiliated brokers : https://www.remax-quebec.com/en/real-estate-brokers?Copropriet=1
