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I’m renting out my condo. Do I need to notify my insurer?

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RENTING OUT YOUR CONDO: WHAT YOU NEED TO KNOW TO BE WELL INSURED

Whether as a financial strategy or to meet a specific need, many co-owners choose to rent out their condo rather than sell it. But this seemingly simple decision can have a major impact on your home insurance and your legal obligations as a co-owner.

1. CHECK YOUR DECLARATION OF CO-OWNERSHIP

First of all, carefully review your condominium charter. It may contain restrictions on renting out your unit. For example:

  • Maximum number of units that can be rented
  • Minimum lease terms
  • Obligations of the tenant to register with the syndicate

Even if there are no restrictions, you must notify the syndicat de copropriété if you rent out your condo. The syndicate must keep a register of occupants and monitor the building’s rental rate.

2. WHY DOES YOUR INSURER WANT TO KNOW IF YOU RENT?

When you take out or renew your condominium insurance, the insurer always asks the following question:

“How many units are leased to third parties in the building?”

Why is this? Because the level of tenant occupancy influences the perceived level of risk. Unlike an owner, a tenant doesn’t always have the same concern for maintenance. This can increase the likelihood of a claim.

Thus, a condo occupied by a tenant may be viewed differently by insurers.

3. WHAT IS THE IMPACT ON YOUR INSURANCE?
  • If 20% to 25% of units are leased, most insurers will not change the premium.
  • Above this threshold, some revise their rates upwardsconsidering the property to be a income property.
  • Your home insurance broker needs to know the exact situation of your building to offer you adequate protection.

4. CHOOSE YOUR TENANT WITH CARE

Even if you choose a tenant in good faith, the fact remains that you lose a certain amount of control over the maintenance and precautions taken in your condo. This represents an additional risk factor for your insurer.

IN SUMMARY

Renting out your condo is a legitimate decision, but one that shouldn’t be taken lightly. To avoid any surprises :

  • Check your declaration of co-ownership
  • Inform your union
  • Inform your insurer or broker
  • Select your tenant with care

Above all, make sure your condo insurance covers this new reality.