Our SUBL precedent has recently evolved. We have buttressed its existing strict liability insurance deductible provision by specifically defining circumstances where an owner is liable for a water leak, fire or other “act or omission” perils, in case the government proclaims the proposed amendments to s. 105 of the Condo Act.
The SUBL can be adjusted to protect the Corporation from incurring excessive insurance deductible amounts. We have also clarified the Corporation’s optional rights of inspection of various unit safety devices and hazards, including chargeback rights in s. 92 or s. 105 scenarios, as described below. Here are some of our SUBL improvements:
- A SUBL can be modified to include differing provisions for a high rise, townhouse, commercial or industrial condo to suit the circumstances.
- GMA’s precedent form of SUBL contains more than just a list of insured Standard Improvements. It contains 14 specified Exclusions whereby the Corporation will not be held responsible to insure or repair damage.
- The SUBL also specifies the quality of repairs and the Corporation’s applicable insurance requirements.
- Importantly, the SUBL demonstrates many reasons why owners should obtain their own inexpensive, comprehensive condominium owner’s insurance policy with a minor deductible amount.
If your Corporation does not have an SUBL, get one.
Insurance Deductibles ~ Section 105 of the Condo Act currently continues to allow an SUBL to “extend the circumstances” by requiring the unit owner to bear strict liability for the lesser of the cost to repair an event of damage and the Corporation’s insurance deductible amount. Such an efficient strict liability regime eliminates expensive battles amongst two or more unit owners and their insurers affected by a loss (as protected by a court case upholding GMA’s strict liability provisions). Owners should obtain their own individual insurance policy to cover any such strict liability claim (amongst many other protections) for a minor deductible amount at an inexpensive cost.
Unfortunately, some government may one day implement the proposed revisions to s. 105 which would limit an owner’s responsibility to circumstances only where the Corporation can actually prove that an owner, lessee, resident or other person has committed an “act or omission” which causes damage to a unit, the common elements or assets insured by the Corporation. It is hoped no government will be so foolish as to revert to the dark ages before May 5, 2001, thereby imposing a difficult burden of proof upon the Corporation. That would result in unnecessary conflicts, delays, wasted efforts and increased legal and other expenses. GMA has proactively eliminated such potential “act or omission” disputes by preserving our SUBL’s preferred strict liability criteria, while also specifying provisions holding unit owners responsible for a number of defined “acts or omissions” causing water, fire and other defined damage liabilities. It is intended that a judge or arbitrator should respect that the Corporation’s owners have jointly determined by by-law the criteria proving the circumstances when a unit owner will have to bear or insure the lesser deductible cost in any such defined “act or omission” situation.
Excessive Deductibles ~ Recently, deductible amounts required by the few available condo insurers have exceeded $50,000, $100,000 or up to $500,000 for some condos, imposing a huge, unpredictable financial risk and burden upon them, giving rise to special assessments, especially in circumstances where repeated events could occur. If a strict liability insurance deductible provision is no longer permitted, then, under a regime of excessive deductible amounts, such a Corporation would have to eliminate most defined Standard Improvements from the SUBL. Then, owners and their individual insurers would have to bear the cost of repairs in any such event of damage, instead of all owners collectively having to do so.
Corporations facing excessive insurance deductibles might proactively consider various damage prevention methods, such as replacing Kitec piping, solutions to prevent pinhole leaks and installation of water detection systems which automatically shut off the water when leaks occur, in addition to ensuring compliance with all fire protection requirements – any of which would turn out to be a cost-effective investment.
Unit Hazard Inspections & S. 92 ~ We have also enhanced the Corporation’s rights of entry to undertake annual, emergency or other inspections of units, to protect a list of specified safety devices and to prevent potential hazards applicable to fire, plumbing, electrical and HVAC equipment, window limiters, mold prevention, hoarding hazards and health and safety precautions. A carefully drafted maintenance warning notice can allow the Corporation to undertake required maintenance at the owner’s expense, collectible by means of a lien if necessary, pursuant to s. 92 of the Condo Act.
*J. Robert Gardiner, B.A., LL.B., ACCI, FCCI is the senior partner of Gardiner Miller Arnold LLP and manages its CondoLienMachine™