Monday December 4 2023

Management of claims in co-ownerships: compensation of the syndicate without depreciation

A recent decision of the Court of Quebec, under the presidency of the Honorable Gilles Lareau, J.C.Q. clarifies a recurring question concerning the right of the syndicate of co-ownership to total compensation in the event of a disaster.

The judgment, rendered in a case of compensation linked to water damage in the private part of the co-owner, raises important questions in terms of civil liability regarding the possibility for an insurer to reduce the amount of compensation on the basis of the principles of depreciation of property and the building with regard to the syndicate’s claim.

In this case, the co-owner’s liability being admitted, the co-owner’s insurer contested the amount of costs incurred by the syndicate, i.e. $9,783, to repair the damage caused by the water damage. The issue in dispute was whether the syndicate was entitled to claim 100% of its loss or whether it had to assume a 10% depreciation due to the age of the building before the loss, as the insurer claimed.

The Court concluded that the syndicate was well-founded in its rights to claim and obtain full reimbursement of the costs incurred for the restoration of the building and rejected the insurer’s claims.

According to paragraph 16 of the judgment:

[16] “In the present case, the victim of the damage does not benefit from the added value caused by the refurbishment of the building. There is therefore no enrichment which would justify the application of depreciation against the syndicate.”

This decision will, we hope, have significant implications in the processing of claims for the benefit of syndicates of co-ownership and confirms a recognized principle in civil liability now applicable in co-ownership law.

Here is how the judge expressed himself on the subject:

[17] “The compensation that the syndicate seeks is nothing more than the amount of its loss. Under the principles of civil liability in Quebec, it has the right to receive full compensation.”

The court’s decision should thus serve as a valuable reference, not only for the legal field, but also for property management professionals.