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Who Is Responsible to Repair and Pay for Flood Damage in a Condominium Unit?

There is a great deal of confusion surrounding who is responsible to repair a condominium unit after damage. Naturally, many elements have to be considered such as whether the incident is an insurable one; whether the occupants are at fault; whether the damage is limited to one unit, to the common elements or whether many units have been damaged.  One would also have to consider the source of the damage:  was the source of the damage a leaking dishwasher or a common element water pipe?  Most importantly, the responsibility to repair a unit after damage will greatly depend on the specific language of the condominium’s declaration and of its by-laws.  Every case has to be evaluated on its specific facts.

Still, as a starter, it is useful to understand the difference between the obligations to “maintain” and the obligation to “repair after damage”.

Help us get an accurate picture of how the condo world is coping with insurance challenges by taking our short survey. It may be best (but not entirely necessary) for you to have in hand your most recent insurance certificate if you want to be able to answer all questions.

Obligation to “maintain”

Section 90 of the Condominium Act, 1998 (the “Act”) provides that the condominium corporation has the obligation to maintain the common elements and that each owner has the obligation to maintain his or her own unit. Most declarations will reiterate the owner’s obligation to maintain his or her unit to the standard of a “prudent owner” and provide that each owner shall be responsible for all damages to any and all other units and to the common elements which are caused by his or her failure to maintain his or her unit.

Obligation to “repair after damage”

On the other hand, section 89 of the Act imposes an obligation on the condominium corporation to repair both the units and the common elements after damage, subject to any provision of the declaration which may alter the corporation’s obligations and which may impose an obligation on the unit owner to repair his or her unit after damage.

The corporation’s obligation to obtain insurance coverage

Section 99(1) of the Act provides that the condominium corporation has the obligation to obtain insurance to cover damage to both the unit and the common elements caused by major perils, such as a “fire, lightning, smoke, windstorm, hail, explosion, water escape, strikes, riots or civil commotion, impact by aircraft or vehicles, vandalism or malicious acts” or other perils that a declaration or by-law may specify.

The owner’s responsibility to obtain insurance coverage

While the corporation has the obligation to maintain a certain level of insurance coverage for damage to the units, the owner is responsible to obtain and maintain sufficient insurance to cover any damage to any personal property within his or her unit such as:

  • Furnishings;
  • Fixtures;
  • Equipment;
  • Decorations;
  • Personal property;
  • Chattels; and,
  • Any improvements or additions to the standard unit

The Act does not impose an obligation on the owner to obtain insurance. Clearly, owners really should obtain sufficient insurance coverage or risk having to pay for repairs to their unit.

Who is responsible to pay for damages caused by a flood?

The unit owner will be responsible for all costs related to damage to his/her personal possessions and any improvements or additions to the standard unit, whether or not the owner has maintained insurance. The condominium corporation’s insurance will pay for the cost of repairing the damage to the standard unit.  All of this is, of course, subject to contrary language in the declaration.

Who is responsible to pay the insurance deductible?

As a starting point, section 105 of the Act provides that the condominium corporation is responsible to pay the deductible, if any. However, there are exceptions to that. For instance, if the owner has caused the damage to his unit through an act or omission, the owner is responsible to pay the deductible. Section 105(3) of the Act provides for a further exception, which allows the condominium corporation to pass to the owner the responsibility for the deductible if it has adopted a by-law to that effect.

In sum, in order to determine whether the Corporation or the unit owner is responsible to repair damage caused to a unit or payment of the insurance deductible, it will be necessary to refer to the Act, the Declaration and the condominium by-laws, as there is no “one-size fits all” answer to this question.

Condominium corporations should speak to their lawyer to ensure they have a good understanding of their obligations and owners should speak to their insurer to ensure they are adequately covered.

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(This article was first published by the author on March 6, 2012)