The Importance of a Standard Unit Description
As explained in a recent blog, condominium owners are “entitled to the coverage available under the corporation’s insurance”. Put another way, the corporation’s insurance also belongs to the owners.
In Ontario, condominium corporations are obligated to obtain insurance (against certain perils or risks described in Section 99 of the Condominium Act) covering the common elements and the standard units. The standard units are either described in a by-law (what we refer to as a “standard unit by-law”) or, for condominiums declared after May 5, 2001, the Declarant is supposed to provide a standard unit description in accordance with Section 43 (5) (h) of the Condominium Act, 1998 (the Act).
Note that the unit boundaries (in the Declaration) don’t really give us much information about the standard units. The standard unit description gives the detail of the standard features that are contained within those unit boundaries (such as the standard flooring, cabinetry, interior doors, trim, plumbing and lighting fixtures, hardware, etc.). [Appliances – unless they are built-in – are not part of the real estate and therefore are not part of the standard unit.]
If a condominium does not have a standard unit description, in my view this is “not a good thing” for the following reasons:
(a) Section 99 (5) of the Act states as follows:
(5) For the purpose of this section, the question of what constitutes an improvement to a unit shall be determined by reference to a standard unit for the class of unit to which the unit belongs.
So, if the condominium doesn’t have a standard unit description, it’s possible that there may be no unit improvements – meaning that all unit features would be considered “standard” (and therefore to be insured by the corporation). At least one Court has ruled accordingly.
(b) If we can’t identify the unit improvements (to be insured by the owners), this may mean that the “unit improvement insurance” held by most owners could essentially be wasted. [Most condominium owners tend to have “plenty” of insurance for unit improvements…..but of course each owner should check this with his or her broker. But again: Without a standard unit description, the owners’ unit improvement insurance may simply be wasted.]
FURTHER NOTE: Sometime in the coming years, we are expecting an amendment to the Act which will introduce a “statutory” standard unit description for any condominiums that do not have their own standard unit description. However, the statutory standard unit description may or may not be appropriate or suitable for a given condominium.
The bottom line is as follows: If you don’t have a standard unit description (or if you have one, but you would like to change it), I recommend that you pass a standard unit by-law to create or change your standard unit description. It’s important!
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