Canadian Underwriter

Why this strata unit owner does not have to pay for common area damage

September 9, 2021   by Greg Meckbach

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A British Columbia condo corporation that charged a unit owner $25,000 for common property repairs has been ordered to reverse $15,000 of the charge.

Claire Adamson owns a strata unit which she rents out. Adamson lives at a different address. On Feb. 25, 2020, a water leak from Adam’s unit damaged common property.

In B.C. condominium corporations are officially called strata, a term that applies not only to apartment-style condos but also townhouses and certain subdivisions on strata land.

In Adamson’s case, her home insurance paid the first $10,000 of cost to repair common-area damage from the 2020 leak. The strata charged Adamson an additional $15,053.11. The strata corporation did not make a claim on its commercial property insurance covering common property because the deductible on the strata corporation’s policy was $35,000.

Until 2019, the deductible on the strata common property – on the strata corporation’s commercial policy – had been $10,000. Adamson’s home insurance, on her individual strata unit, only covered $10,000 in damage to common areas if the damage was caused by something in her own unit.

In Adamson v. The Owners, Strata Plan, released Sept. 2, the BC Civil Resolution Tribunal ruled that the strata corporation should not have charged Adamson $25,053.11. Instead, Adamson should only have been charged the $10,000 her own home insurance would have paid. The CRT ordered the strata corporation to reverse the extra $25,053.11 charge and to also reimburse Adamson for the $225 Adamson had to pay in CRT fees.

The word deductible in red stamp

Normally the strata corporation would have been able to seek reimbursement from the unit owner for damage from a water leak originating from that unit.

But in Adamson’s case, CRT member Kate Campbell found that the strata did not meet the requirements in provincial law to provide notice to Adamson that the common-area insurance deductible had been raised in 2019 from $10,000 to $35,000.

Adamson told the CRT it was not until after February 2020 when she learned of the increase, from $10,000 to $35,000, of the strata corporation’s deductible on its commercial property policy for damage to common areas. This is why Adamson did not ask her own home insurer to increase her coverage, for common-area damage, to $35,000. Adamson says when she renewed her own insurance, in May 2019, she only renewed for $10,000 in common-area coverage.

For its part, the strata argues it did include information on the increase in its deductible in the minutes of an annual general meeting held in November, 2019. It also argues that information was posted to the strata website. But this does not meet provincial law, Campbell wrote.

The effective date, of the new deductible for common area damage, took effect May 31, 2019, which was five months before the AGM.

The B.C. Strata Property Act requires strata corporations to review annually the adequacy of the strata corporation’s insurance, report on the insurance coverage at each annual general meeting, and “inform owners and tenants as soon as feasible of any material change in the strata corporation’s insurance coverage, including any increase in an insurance deductible.”

In Adamson’s case, CRT member Campbell found that informing strata owners five months later, through AGM minutes, was not “as soon as feasible.”

The CRT found, based on email evidence, that in 2017 Adamson gave the strata corporation her address outside strata property. This was after Adamson got permission from the strata to rent out her unit.

Section 61 of Strata Property Act stipulates that if a unit owner has given the strata corporation an outside address to which notices are to be sent, then the strata corporation must give the notice to the owner either “by leaving it with the person”, or by “mailing it to the address provided.”

The strata also argued that Adamson should have checked the strata corporation website to find out about the deductible increase.

At one point, it argued that a notice was sent out by mail. But Campbell found that the evidence before her does not establish that the strata mailed any notification about the deductible increase to Adamson before the February 2020 leak.

Quoting the provincial Strata Property Act, the CRT found that emailing or posting notices on the strata website does not meet the requirements of section 61 of SPA as it applies to sending official notices to a unit owner who lives elsewhere and who has provided the strata corporation with their address.

When a unit owner does not give a strata corporation an outside address to which notices about the strata property can be sent, then the law stipulates that the strata corporation has a choice of the following methods of delivery:

  •  leaving it with the person,
  • leaving it with an adult occupant of the person’s strata lot,
  • putting it under the door of the person’s strata lot,
  • mailing it to the person at the address of the strata lot,
  • putting it through a mail slot or in a mailbox used by the person for receiving mail,
  • faxing it to a fax number provided by the person, or
  • emailing it to an email address provided by the person for the purpose of receiving the notice, record or document.

Feature image via Media

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