What the heck are small condos? 

I define them as condominium corporations with four units or less.

Usually they show up as a duplex or fourplex. We believe builders/developers choose the condominium route to reduce those expensive lot servicing costs. A condo duplex looks the same as a normal duplex. You only know it’s a condo by searching the title.

There are lots and lots of issues with small condos. But today, here's the BIGGIE.

Any condominium, big or small, 2-unit or 200-unit, needs condo common property insurance.

You will often hear that the normal condominium rules don't apply to a small condo.

Why? Because the seller says it isn't being run as a condo. It's more like an apartment building.  So, ‘normal’ insurance is fine.

It doesn't matter if it's being 'run' as a condo or not, the Condominium Property Act requires proper condo common property insurance.

Many insurance companies have exited condo insurance entirely. And, the ones that are left don't like small condos. Some will only insure if one person owns all the units. They won't do a single unit.

No condo common property insurance means no financing. No financing means a condo unit is essentially unsaleable!

My recent client had to call 10 insurance brokers to finally find costly condo common property insurance.

Buyers and Sellers should each consult with their insurance broker before committing to a deal.

Lessons Learned:

Sellers: ask your existing insurance broker if they will continue to insure common property for a new buyer;

Buyers: you need a firm commitment from an insurance broker that they will insure the condo common property.

Cheers,

Barry