Major Loss in a Divided Co-ownership: Rebuilding and Insurance

A major loss in a divided co-ownership disrupts co-owners’ lives and mobilizes the board of directors (board). From safety and opening the insurance claim to reconstruction, every decision affects costs, timelines and the quality of the restoration. This article guides you step by step through managing the insurance proceeds and rebuilding effectively in Quebec.

Beyond the emergency, you must rely on the declaration of co-ownership, the by-laws of the immovable and the Civil Code of Quebec. The syndicate is required to preserve the building and insure the common portions and, depending on the coverage, the standard private portions. Rigorous coordination, compliance with standards and clear communication with co-owners make all the difference.

When is a loss considered “major,” and what obligations apply?

In practice, a loss is considered major when it affects habitability, causes structural damage or affects multiple units (fire, major sewer backup, water-main break, etc.). The syndicate must preserve the building and protect the affected common portions and private portions.

• The Civil Code of Quebec requires the syndicate to ensure the preservation of the building and the administration of the common portions (see, in particular, section 1039 C.C.Q., LégisQuébec).
• The syndicate must take out insurance covering the building, generally based on its reconstruction value, excluding co-owner improvements (see section 1073 C.C.Q., LégisQuébec). Co-owners generally insure their improvements and civil liability under their own policies.
• The rules governing the insurer’s recourse and the allocation of certain costs, including the deductible, are set out in the Civil Code (see, among others, sections 1074.1 and 1074.2 C.C.Q., LégisQuébec). Refer to your declaration of co-ownership and the by-laws of the immovable for the applicable procedures.

Remember that the designation “major” is not strictly a legal one; it helps the board prioritize management, mobilize resources and, where necessary, call a meeting of the co-owners.

The first 72 hours: secure, document and report

Initial actions have a considerable impact on the rest of the insurance claim and on reconstruction costs.

1. Safety first

   • Evacuate dangerous areas; shut off the water, electricity or gas supply as needed.
   • Call emergency services (911) and, if required, an emergency-response contractor for drying, tarping or decontamination.

2. Preservation and mitigation

   • Take reasonable measures to limit the worsening of the damage (e.g., pumping and ventilation). These mitigation costs are often covered by the syndicate’s policy.
   • Isolate at-risk common portions and private portions to prevent cross-contamination from mould, soot or sewage.

3. Thorough documentation

   • Keep a record of interventions, dated photos and videos, and communications. Retain invoices related to emergency measures.
   • The board should adopt minutes documenting the emergency decision and the measures taken, to ensure traceability.

4. Report to the insurer

   • Open the claim promptly with the syndicate’s insurer and inform co-owners that they should report the loss to their own insurer for improvements and contents.
   • Ask for the appointment of a claims adjuster (appointed by the insurer) and, if the claim is complex, consider retaining an independent insured’s loss consultant.

5. Transparent communication

   • Post regular updates on the co-owner portal covering timelines, access, temporary rules and upcoming steps. Good coordination reduces disputes and delays.

Useful resources:
LégisQuébec – Civil Code of Quebec on the syndicate’s obligations and insurance
RGCQ – Resources and best practices in co-ownership management

Insurance proceeds: who pays what, and how are they allocated?

The damage assessment generally distinguishes between the building “as constructed” (the original standard of the private portions), the common portions and improvements made by co-owners.

• Scope of the syndicate’s policy: It covers the common portions and, depending on the declaration of co-ownership and the definitions of “standard,” the original components of the private portions. Improvements, such as high-end finishes and modifications, fall under the co-owner’s insurance.
• Deductible and cross-claims: Under the Civil Code of Quebec and your by-laws of the immovable, the deductible under the syndicate’s policy may, in certain circumstances, be claimed from the co-owner from whose private portion the loss originated, subject to the prescribed conditions (see section 1074.2 C.C.Q., LégisQuébec). Check the wording of your declaration of co-ownership and the applicable thresholds.
• Subrogation and fault: An insurer’s subrogation rights against co-owners or occupants are limited by the Civil Code of Quebec (see section 1074.1 C.C.Q.), subject to faults defined by the law and the policy.

Allocation of the insurance proceeds

• Common portions: The proceeds are paid to the syndicate and must be used to restore or replace the affected components.
• Private portions (original standard): Based on the evidence of the standard, the proceeds may pass through the syndicate to restore the private portions to their original condition. Improvements are handled through the co-owner’s policy.
• Quality differences: Co-owners may pay the difference if they want materials that are superior to the standard.

Practical advice

• Have the “original standard grid” validated before authorizing work in the units.
• Keep separate accounting for each component—common portions versus private portions—to facilitate financial reporting and the syndicate’s certificate for future transactions.

Useful legal references:
Syndicate insurance: section 1073 C.C.Q. (LégisQuébec)
Recourse/subrogation and deductible: sections 1074.1 and 1074.2 C.C.Q. (LégisQuébec)

Reconstruction plan: compliance, tendering and site monitoring

Reconstruction must restore the building while complying with the standards in force and applicable municipal permits.

• Plans, specifications and permits: Where necessary, retain an architect or engineer to align the scope of work with the applicable construction code. Clearly determine the portion covered by the insurance proceeds.
• Licensed contractors: Check the RBQ licence and appropriate category of every contractor before awarding a contract. Consult the RBQ verification tool.
• Requests for bids: For major claims, obtain 2 to 3 comparable bids based on the same specifications and materials. Require a schedule, a hazardous-materials management plan for asbestos, and certificates of liability insurance.
• Quality control and progress payments: Plan inspection milestones, contractual holdbacks and minutes for partial and final acceptance. Document deficiencies and the deficiency list.
• Maintenance logbook / EUC: Update the maintenance logbook with completed replacements and new warranties. Add technical data sheets and commissioning dates.

Useful resources:
Check a contractor’s licence – RBQ
LégisQuébec – Building Act (regulatory references)

Governance and finances: board decisions, special meeting and budget

A major loss requires proper decisions that are recorded and communicated.

• Board decisions: Authorizations for emergency measures, hiring professionals, tendering parameters and contractor selection. Keep detailed minutes.
• Meeting of co-owners: Hold a special meeting if important approvals are required, such as major work, borrowing or special assessments. The quorum and voting procedures are those set out in your declaration of co-ownership and the C.C.Q.
• Budget and contributions: The insurance proceeds cover part of the costs, but gaps may arise because of the deductible, exclusions or upgrades to current standards. Plan for special assessments while respecting the allocation of the contingency fund, which is reserved for major repairs and replacements of common portions, as well as financial planning.
• Certificates and transparency: Keep a complete audit trail. Losses and work should appear in the syndicate’s certificate provided when a unit is sold, as well as in the financial statements and the board’s report.

For smooth operational coordination, see our operations management and administrative management services:
Our services – Operations management
Our services – Administrative management
See our blog for more practical guides

Frequently asked questions (FAQ)

Q1. How is “original standard” defined in a unit?
The original standard corresponds to the configuration and materials initially specified by the developer. It is described in the declaration of co-ownership, its schedules or a standard grid. This reference makes it possible to distinguish what falls under the syndicate’s policy from what constitutes a co-owner’s improvements.

Q2. Who pays the syndicate’s insurance deductible?
The answer depends on the C.C.Q., the declaration of co-ownership and the by-laws of the immovable. In certain cases, the deductible may be claimed from the co-owner from whose private portion the loss originated, subject to the conditions set out in the law and the co-ownership by-laws (see, in particular, section 1074.2 C.C.Q. and your internal by-laws).

Q3. Must the building be rebuilt “as is” or “to current standards”?
Restoration must comply with the standards in force and municipal requirements, even if this differs from the original materials or methods. Certain upgrades to current standards may not be covered by the insurance proceeds; financing must then be planned through a special assessment or the budget and validated with the insurer and the professional responsible for the plans.

Q4. Can the reopening of unaffected units be accelerated?
Yes, if safety is ensured and access is independent. However, avoid opening areas before emergency measures and decontamination are complete, to prevent the spread of mould or soot. Establish a work phasing plan with the contractor and insurer.

Additional resources:
LégisQuébec – Civil Code of Quebec (sections 1039, 1073, 1074.1, 1074.2)
RGCQ – Best practices after a loss

This article provides general information and does not constitute legal advice. For your situation, consult a lawyer or notary.

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