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Armand Conant Headshot

A growing number of condo corporations are struggling to get reasonable insurance coverage, says Toronto condominium lawyer Armand Conant.

“It’s a mammoth problem,” says Conant, a partner with Shibley Righton LLP. “In light of the number of claims being made by condo corporations, insurers appear to want to get out of the industry.”

Since its inception, Ontario’s Condominium Act has required a condo corporation to “obtain and maintain insurance on its own behalf and on behalf of the owners, for damage to the units and common elements that is caused by major perils” or other circumstances identified in the corporation's declaration and bylaws.

According to the Act, those major perils include fire, lightning, smoke, windstorm, hail, explosion, water escape, strikes, riots or civil commotion, impact by aircraft or vehicles, vandalism, or malicious acts.

Although the legislation makes no mention of the availability of coverage, it does specify that the coverage level must be high enough to meet the replacement cost of damaged property.

“Since the 1960s, condos have been able to obtain insurance. If they’ve had frequent claims, then their premiums and deductibles usually go up,” Conant tells AdvocateDaily.com.

But in the last two years, he says industry watchers have noticed a large spike in premiums and deductibles, leading to the suspicion that insurers are trying to get out of the business.

One of his clients was forced to make three substantial claims following flood damage, two of which the condo board believes resulted from faulty construction by the developer.

While the claims went smoothly, the insurer informed the corporation that it would not renew its coverage when the policy expired.

“They were scrambling around, trying to find insurance,” Conant says, explaining that the board only managed to obtain new coverage in the nick of time through its broker by cobbling together a consortium of insurers prepared to take on the risk of further claims.

“It got down to the last day before the existing policy was to expire, and it was only possible through the work of many people,” he says.

But the board’s relief at getting some coverage in place was tempered by the terms of the deal, which saw their deductible for flood damage jump to $500,000, while the deductible for all other claims rose to $350,000. In addition, the corporation’s annual premium more than tripled from $65,000 to roughly $225,000.

“Outside of a catastrophic event, they’re essentially paying $225,000 for the privilege of not being insured because almost all of the claims will come in under the deductible,” Conant says.

And this client is not alone, he says, adding that he’s heard of one corporation that has a $1-million deductible.

“We’ve seen case after case like this, and we believe it is on the rise. In addition, we are aware of at least three or four condo corporations who cannot get insurance at any price, at any deductible, which means the owners are left with no insurance on their building,” Conant says. “If they can get it, then the owner can’t buy adequate unit insurance to cover the corporation’s large deductible, thus exposing themselves to liability and maybe, in the most extreme cases, even losing their home.

“It’s a hot topic in the industry.”

Conant says stakeholders, such as the Toronto chapter of the Canadian Condominium Institute (CCI), have approached the government to make it aware of the growing crisis, and are also offering assistance in trying to find solutions. He says the CCI is holding a symposium on the issue on Nov. 9 at the Delta Hotel Toronto. For more information, contact info@cci.ca

 

Date_Published
2019-11-07
Description

Matthew Urback Head Shot

The controversy surrounding the death of financier Jeffrey Epstein shows that no matter how rich or famous you are, issues around estate planning can come up after you die, says Toronto wills and estates lawyer Matthew Urback.

“Having hundreds of millions of dollars does not necessarily insulate anyone from the legal challenges in an estate after a person dies,” says Urback, a partner with Shibley Righton LLP.

According to a CNBC story, a bitter legal battle is expected following the 66-year-old’s suicide in a Manhattan jail cell, where he was being held pending trial on charges of sex trafficking with minors. His last will was drawn up just two days before his death, the story states, with his estate valued at more than US$577 million, as well as the fine arts, antiques and collectibles that have yet to be evaluated.

It is expected that the women who accused him of sex offences will file claims against his estate, tying it up in litigation for an unknown period of time, CNBC reports.

While Ontario’s laws in this area are different from those in the United States, Urback says the tussle over Epstein’s fortune provides three valuable lessons for people on this side of the border.

Your debts don’t die with you

“Epstein left quite a sizeable estate, and many lawsuits are almost certainly coming against it, so I think people might wonder if the same situation arose here in Canada, would the debts be passed onto the beneficiaries,” Urback tells AvocateDaily.com.

“The answer is no because any money awarded from the lawsuits is taken from the estate first, with no liability passed onto heirs,” he says.

In Ontario, if someone has launched a lawsuit against an individual and that person dies, a court order has to be granted for the action to continue, with the estate trustee or executor standing in place of the deceased person in defending the lawsuit, says Urback.

“If Epstein were an Ontario resident, just because he’s dead wouldn’t mean that he would escape from his debts,” he says.

We don’t have an estate tax

Since one of Epstein’s five homes is located in New York City, the story notes that New York State will probably apply to have its estate tax — which tops out at 16 per cent — levied against him.

“By contrast, Canada is a very favourable jurisdiction for hoarding assets and wealth and transferring it onto future generations,” says Urback.

The only thing Canadians pay upon death is a probate fee of approximately 1.5 per cent of the estate, he says, explaining that it’s meant as more of an administrative surcharge.

“Who knows, one day our government may bring in an estate tax, following the example of other countries, including the United States,” Urback says.

Deathbed wills are valid but troublesome

The story states that Epstein’s last will was drawn up two days before his suicide.

“There’s nothing wrong with that, as people make wills all the time on their deathbed, but that can lead to potential challenges,” says Urback.

“Doing a will right before your death isn’t inherently problematic, but the circumstances surrounding it leads to some vulnerabilities,” he says.

Those challenging the will of people who are unhealthy and nearing the end of their lives could argue they are not competent or susceptible to undue influence, even though there have been cases in Ontario where people suffering from illnesses have been deemed to have the capacity to change their wills, Urback says.

“If someone is in hospital and being medicated, those drugs can impact their thinking and mental state, leaving open an avenue for people challenging the will,” he says.

“Many issues evident in the Epstein case really transcend economic status,” Urback says.

 

Date_Published
2019-11-04
Description

Patrick Greco

Harassment is a growing concern for condo corporations, says Toronto condominium lawyer Patrick Greco.

“It’s a huge issue. Cases are coming across my desk on an almost daily basis,” Greco, partner with Shibley Righton LLP, tells AdvocateDaily.com.

While property managers bear the brunt of verbal, emotional, and more rarely, physical abuse from residents, he says security guards, board members, and unit owners have also found themselves the target of various levels of harassment.

“There are examples on a very wide continuum,” Greco says. “But we have found that the courts have a fairly short temper with this sort of behaviour, and are not giving much quarter to the harassers.”

For example, in one recent case, an Ontario Superior Court judge found a resident’s “physical misconduct” and “campaign of aggression” against an Ottawa condo’s staff, directors and unit owners constituted workplace harassment under the Occupational Health and Safety Act (OHSA).

The judge imposed an injunction on the resident, prohibiting him from communicating with almost anyone associated with the condo, except in an emergency or via a lawyer acting for the corporation.

The judge in the case also cited another decision, in which Greco successfully obtained an order on behalf of a Toronto condo corporation, that a unit owner who had been verbally abusive of staff cease and desist from uncivil or illegal conduct in violation of the Condominium Act.

In order to boost their case should legal action become necessary, Greco says condo staff or directors should meticulously document concerning incidents and set clear boundaries for residents whose behaviour risks crossing a line into harassment, such as limiting them to in-writing complaints only.

“Courts have taken the view that complaining is not harassment. People have a right to be disgruntled, within reason,” Greco explains. “What judges don’t want to see is that complainants have just been told to shut up entirely.”

In addition, he says condo corporations should turn their minds towards enacting anti-harassment policies and fully investigate any incidents of alleged harassment that are brought to their attention by staff.

“Most boards are very good and protective of their site staff, but if they fail to investigate or deal with any concerns raised by employees, they could find themselves in trouble under the OHSA for tacitly allowing harassment, especially if there are any further incidents,” Greco says.

 

Date_Published
2019-10-30
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