Service Line Notice
The Notice from Service Line Warranties of Canada (that has partnered with the City) appears to have two purposes. First, the Notice lets property owners know that the property owner owns (and is responsible for) certain service lines (sewers, drains and/or water lines) crossing the owner’s property and connecting to the City’s main service lines (typically located beneath a neighboring roadway). For condominiums, the service lines may in many cases form part of the common elements, to be repaired and maintained by the condominium corporation (unless some other party, such as the City or a neighbor, has this responsibility under the terms of an easement or other instrument). Second, the Notice lets property owners know that there is a warranty program or plan offered by a particular provider (Service Line Warranties of Canada), which can be purchased for a monthly fee and can cover future work that may be required on the particular service lines. The idea is of course to avoid sudden significant costs if and when the service lines need work.
So, it seems to me that the question for any property owner or condominium corporation is as follows: Does it make sense to purchase the offered warranty plan?
In some cases, this might in fact be a good idea, but there are many factors to consider. For instance:
- What precisely are the service lines in question (including the materials, sizes, lengths, etc.)?
- Are you sure that those service lines are in fact your responsibility?
- What are the ages of the particular service lines?
- What is the normal life expectancy of the particular service lines? And what is the estimated cost to repair or replace the service lines (when they require such)?
- What is the risk that the particular service lines might not reach their normal life expectancy?
- What is the relevance of the bedrock, soils and trees in the area?
- Could nearby construction (past, present or future) be a factor when it comes to the longevity of the service lines?
- What predictions (for future repair and replacement of the particular service lines) are contained in the corporation’s reserve fund study and plan? How do those predictions (and resulting related contributions to the reserve fund) compare to the cost of the warranty plan?
- What exactly is covered by the warranty plan? Are there any important exclusions?
- What are the other important terms of the warranty plan?
- Is there a risk that the warranty provider might go bankrupt? If that happened, where would that leave you?
- Could the Corporation have (or purchase) coverage for this work under an existing insurance policy, or could such coverage be obtained in any other way at less cost?
In summary, there are plenty of questions to be answered in order to come to a decision about the merits of the offered warranty plan.
It seems to me that one good option would be to ask many of the above questions to the condominium corporation’s reserve fund analyst or engineer. With the benefit of that expert opinion, you should hopefully be in a position to decide whether or not the warranty plan makes sense for you.