Skip to content
Join our Newsletter

Condo Smarts: Bylaws limiting owner’s liability shift burden to others

Dear Tony: Our strata corporation has consulted with a lawyer and our property manager and has been advised that if we approve a bylaw that limits the amount an owner would have to pay if they were responsible for a claim, it would be easier for the
2012-Tony-Gioventu.jpg
Tony Gioventu is the executive director of the Condominium Home Owners Association of B.C.

Dear Tony: Our strata corporation has consulted with a lawyer and our property manager and has been advised that if we approve a bylaw that limits the amount an owner would have to pay if they were responsible for a claim, it would be easier for the strata corporation to renew our insurance policy.

The bylaw basically limits the amount to $50,000, as we now have a $250,000 deductible for water escape.

This makes no sense to us, however, because the amount an owner would have to pay for the deductible if they caused a claim has nothing to do with the insurance policy.

The strata corporation and the rest of the owners would still be required to pay the remaining $200,000. How does this benefit anyone?

Carmen R., Richmond

Bylaws that limit, restrict or qualify claims, coverage or limitations of liability are extremely complicated to administer.

For example, while the Strata Property Act sets a threshold for corporations that enables them to recover the deductible if an owner is “responsible” for a claim, strata corporations are under the impression if they adopt a bylaw that qualifies this condition as negligence, it is easier to collect.

Not so — the higher standards, definitions or thresholds will require a higher test in the courts or tribunal to obtain a successful judgment.

A bylaw that limits an owner’s liability will impose a greater liability on the rest of the owners, even if they had nothing to do with causing the claim. Yes, deductibles are excessive, but the related risks the insurers are adopting could be equally high.

Owners might be able to obtain insurance to cover high deductibles, but the rational question owners must discuss at your meeting is why they are shielding an owner from such a liability if the owner caused the claim?

Why should the remaining owners pay for a $250,000 deductible if someone causes a claim as a result of failing to comply with strata bylaws, failing to maintain their strata lot or appliances, or other action?

Sadly, there will be owners who lose their homes as a result of high deductibles and claims. We have not identified any related benefits to renewing insurance or cost of policies if strata corporations adopt such bylaws.

An insurance deductible as a result of a claim on your strata policy is a common expense of the strata corporation, and paid by the strata corporation until it is determined who is responsible for the claim and the amount is collected.

A strata corporation is automatically authorized by the act to pay a deductible from the contingency reserve fund or operating fund, or to directly special levy each owner for their share.

Unlike strata fees and special levies, insurance deductibles do not qualify for a lien priority over charges such as mortgages.

While a strata may obtain a decision from the courts or the tribunal for a high deductible amount, if there is no equity left in a property because mortgages are so high, the remaining owners could still be at risk of covering the full deductible amount.

A word of caution: If a strata council or property manager indicate they have legal advice on a matter, it is beneficial to either have the lawyer attend the meeting or include a copy of the written opinion on the proposed bylaw with the notice.

Managers and council members frequently change the wording of a proposed bylaw in a way that does not reflect the lawyer’s advice when they send out the information to owners.

Tony Gioventu is executive director of the Condominium Home Owners Association.