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Can Condo Corporations Recover Insurance Premium Increases From Unit Owners? – Real Estate and Construction – Canada – Mondaq News Alerts

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Canada:

Can Condo Corporations Recover Insurance Premium Increases From Unit Owners?

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Many condo corporations have provisions in their declarations
that provide that the corporation can recover an increase in the
corporation’s insurance premiums from an owner who, by act or
omission, caused that increase (“Premium Increase
Provisions”).  Practically speaking, the use of Premium
Increase Provisions will usually be a result of an increase in a
corporation’s “all-risk” insurance policy.

While commonly seen in declarations, in the past it was rare for
corporations to attempt to rely Premium Increase Provisions to
recover a higher premium amount from an owner. Given recent trends
in the condo insurance industry that have resulted in both premiums
and deductibles increasing substantially, more corporations are
considering whether an increased premium can be recovered from a
specific owner whose act or omission required the corporation to
make its most recent claim.

The most difficult challenge faced by a corporation is
establishing that one specific owner’s act or omission resulted
in a premium increase. Persuasive evidence would require an almost
perfect storm of events, such as the following:

  1. The Corporation receives a quote from an insurer, but does not
    yet commit to the quote;
  2. An owner’s act or omission results in a claim being made
    after the quote was received;
  3. The claim is brought to the attention of the prospective
    insurer;
  4. The same insurer rescinds its original quote on the basis of
    the claim and provides a new quote;
  5. No other claim or event occurs that factored into the
    insurer’s new, higher, quote.

While there are a multitude of scenarios that could result in a
premium increase, the above series of events illustrates the
difficulty in establishing that one single owner’s act or
omission directly resulted in the premium increase. It is far more
likely that industry trends, past claims’ history and multiple
claims between policy renewals all factor together to result in an
increased premium.

Some corporations may also consider attempting to rely on the
acts or omissions of multiple owners that resulted in claims
between policy renewals as a justification to recover the increased
premium on a pro-rated basis from those owners.  This is an
even more complicated scenario, and an adjuster or broker is likely
unable to provide a breakdown of how the increased premium could be
apportioned among the different owners.

While it understandable that corporations will look to reduce
the burden of an increased premium on the owners who have not
caused the corporation to make a claim, extreme caution should be
taken before attempting to rely on a Premium Increase
Provision.

In our view, a court would cast a critical eye on any attempt to
rely on a Premium Increase Provision. The amount of the premium
increase, and the fact that a corporation’s
“all-risk” insurance policy is properly maintained for
the benefit of all owners, would likely result in a court requiring
nothing less than a perfect storm of events to establish that an
owner’s act or omission directly resulted in the premium
increase.

While commonly found in declarations, expectations of
successfully relying on a Premium Increase Provision should be
carefully managed. Corporations may be better served by looking
into measures, such as passing a Standard Unit By-law or monitoring
and safety systems, that could result in a lower premium at their
next policy renewal.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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Questions Your Landlord Should Not Ask You

Devry Smith Frank LLP

As a tenant you have rights including the right to privacy and the right to notice upon a landlord’s entry into your premise. As a renter, you should be aware that there are questions that a landlord simply cannot ask you.

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CHL Leaders: QMJHL grad Vermette enters exciting new career in real estate – Canadian Hockey League

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Gabriel Vermette spent four years in the QMJHL lacing up the skates while also learning many life skills he continues to use today.

“Balancing school, life, playing hockey at the same time, it’s a lot, and it teaches you a lot in life,” recollected Vermette in speaking with Junior Hockey Magazine as part of its CHL Leaders segment. “The big thing is to manage the stress with all of the things that you have (to do). You just have to go with one thing at a time.”

Following four full seasons in the QMJHL from 2009-13 that spanned 246 career contests with the Chicoutimi Sagueneens and Drummondville Voltigeurs – highlighted by a playoff elimination of the Memorial Cup host Shawinigan Cataractes in 2012 – Vermette elected to pursue an education, majoring in psychology at the University of Ottawa where he also suited up for another two seasons with the varsity Gee-Gees.

In all, it was an opportunity that became a reality given Vermette’s ability to access the CHL’s invaluable post-secondary scholarship program.

“At the end of my junior I shifted my plan and began thinking about what I would do in real life if it’s not hockey, so (the scholarship) is vital,” Vermette said. “It took away a lot of stress of having to pay a lot.”

Today, Vermette puts his skills to use in enjoying a new career as a real estate broker with RE/MAX Vision Gatineau in his home province of Quebec.

“It has been one year,” Vermette concluded. “I am really happy with what I am doing. I think I have had quite a lot of success so I am really proud.”

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Gloomy B.C. real estate forecasts not as bad as some predict: agent – CityNews Vancouver

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VANCOUVER (NEWS 1130) — The forecast for buying and selling real estate in B.C. isn’t what it could have been, but it’s not as bad as the double-digit price drops some analysts have predicted, according to a Richmond presale condo and townhouse agent.

Vince Taylor admits he’s biased, but said the facts are not — supply is low in B.C. and interest rates are historically low, so prices will be relatively stable.

“I am expecting a drop-off for sure. I don’t expect the market to rebound in 2020 like it was going to in March, but I see no structural, no macro or micro economic reason for the kinds of drops that have been reported,” he said.

“Tell me how that makes any sense that prices are going to go down when you have the lowest interest rate in 40 years, limited supply, and not that many people actually lost their jobs.”

He adds the COVID-19 cloud is dark, but there is a silver lining, and nothing structurally has changed about the real estate market.

While Canada is seeing the worst GDP numbers in a decade, Taylor said the easing of health and safety restrictions will bring more buyers and lower prices to the market.

The Canada Mortgage and Housing Corp. expects home prices and sales to decline substantially this year and still won’t have recovered by the end of 2022.

The federal housing agency’s special housing market outlook predicts home prices to decline between nine and 18 per cent, and as much as 25 per cent in oil-producing regions, before starting to recover by mid-2021. The report also suggests average home prices in B.C. could drop close to $100,000 this year.

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Will real estate prices plunge? That may depend on the sellers – Financial Post

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The economic uncertainty surrounding COVID-19 has contributed to contradictory estimates of future housing prices and sales. Leading the bears is the Canada Mortgage Housing Corporation (CMHC), projecting average housing prices to fall by nine to 18 per cent.

Others, including economists at the Canadian Real Estate Association (CREA), are not convinced prices will fall as steeply as the CMHC projects. Many homebuyers and sellers have been left perplexed by these conflicting forecasts — much can go wrong if they rely on the wrong estimates in their buy and sell decisions.

Regardless of the sophistication of algorithms, forecasts are necessarily a byproduct of the assumptions forecasters make and the data they use. Assumptions, inherently, are neither right nor wrong. They are informed guesses about future outcomes. When reviewing a forecast based on modelling, always remember the advice from the famed statistician, George Box: “All models are wrong, but some are useful.”

The CMHC forecasts were generated using “a specific set of assumptions for the market conditions and underlying economic fundamentals,” CMHC noted in the report’s appendix.

But how precise are they? CMHC estimates that average Canadian housing prices in 2020 will be anywhere between $493,200 and $518,400, representing a nine to 18 per cent decline from pre- COVID-19 levels. The number of sales transacting through the Multiple Listing Service is expected to be between 416,000 and 450,500.

The above forecasts are for the average price in Canada. Local market forecasts could be much different. CMHC reported provincial estimates for prices, sales and housing starts, with all provinces seeing the same trend of falling metrics through 2020 and a rebound starting later in 2021.

The lowest average price forecast for British Columbia at $609,515 is still more than double that for Alberta at $288,522. Both numbers are for the second quarter of 2022. The lower bound forecast for Ontario at $531,715 is slated for the second quarter of 2021, which suggests that CMHC expects housing markets to recover sooner in Ontario.

CMHC’s report does not disclose the methods or data used to generate forecasts. The report mentions that CMHC forecasts deploy the “full range of quantitative and qualitative tools currently available.”

The report claims that the forecast’s “range provides a relatively precise guidance to readers on the outlook while recognizing the small random components of the relationship between the housing market and its drivers.” However, the wide range of forecast for prices and sales is indicative of the “high degree of forecast uncertainty” partly due to the “unprecedented nature of the COVID-19 pandemic.” To us, therefore, the claim for precision may be a stretch.

Homebuyers and sellers need to be able to understand what forecasts mean for their decision-making processes. Economists prepare estimates with care. However, when predictions differ from the real outcomes, economists readily revise their projections. Homebuyers and sellers, once they have transacted, cannot “revise” their transactions. Hence the stakes are higher for the ones active in the market.

Another way of thinking about future housing prices is to think about the willingness of sellers to accept lower bids for their listings. If one is of the view that sellers will be, on average, willing to accept bids 18 per cent or more below than what they could have received before March 2020, a significant decrease in housing prices could be inevitable. However, this seems to be an unlikely scenario.

If prices start to decline significantly, sellers can slow or even freeze the market by not listing their properties, withdrawing them from consideration, or refusing a lower bid. Sellers’ unwillingness to sell dwellings at lower-than-expected prices can protect against a freefall in housing prices. Also, when less inventory is available for purchase, buyers may have to compete, which could put upward pressure on prices.

Lastly, the average decline in the average price does not imply that an individual dwelling will experience an average drop in valuation. Why? Because the average price forecasts ignore the differences in sizes and quality of housing or the fact that when economic conditions worsen, higher priced homes stop transacting, and lower-valued homes dominate the sales. The shift in the structural composition of housing gives a false impression that housing prices are falling. Thus, CREA’s estimates of constant quality homes are not as severe as CMHC’s.

Homebuyers and sellers should have a look at the market forecasts. But they should base their decisions on their circumstances and local housing market conditions. Remember, forecasts are useful, but not necessarily accurate.

Murtaza Haider is a professor of Real Estate Management at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached atwww.hmbulletin.com.

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