Who Pays For What Damage Depends on Many Variables

Condo Living sent the following question to Shlomo Sharon, President, Taft Forward Property Management Group

Question

I bought a condo eight years ago. I have made some renovations, including the installation of a wooden floor.

Later I noticed a drip coming from the living room air-conditioning column. For the past five years I have complained about this drip to our manager. The cooling company came and said there was nothing wrong and that we should always leave the unit on.

Last summer during a very hot weekend, I found the wood floor lifting all around the air conditioning unit. There was no longer a drip but a stream of water flooding the place.

The cooling people were again called and they fixed the problem. The unit no longer drips, but I am trying to get the condo corporation to pay for the repairs done to the floor and possibly the drywall, but the board says the insurance does not cover upgrades.

I don’t want to claim through my own company and be penalized for clear negligence. Shouldn’t the corporation pursue payment through the cooling company?

Answer

Your problem is a very common one and involves determining three things: where the damage occurred, who was responsible and who pays the deductible.

You need to ask several questions: Where did the damage occur? Was it damage to the unit, the common elements or to an improvement?

Who caused the damage? Was it a result of an act or an omission of the unit owner? What do the condominium documents say?

Is there a Standard Unit bylaw that may exclude the item that is damaged from the definition of the unit, thereby classifying it as an improvement?

Is there a bylaw that extends the circumstances for charging the insurance deductible?

From your comments, it is unclear whether the wooden floor is considered part of the unit or an improvement.

If it is an improvement, then this would be covered through your insurer and would not be the condominium corporation’s responsibility to pursue, regardless of who caused the damage.

In your case, you know the wooden floor was installed after registration and is most likely an improvement to the unit. Others in a similar situation would need to determine if the damaged floor is part of the unit or an improvement by a review of the corporation’s declaration on unit boundaries, and make a check to see if the condo has enacted a Standard Unit bylaw.

If the damaged floor was part of the unit and not an improvement, then the corporation is obligated to put it through its insurer if the damage is more than the deductible amount.

If the damage was not the result of the owner’s act or omission, then the corporation is responsible for the costs – even the deductible – unless there is a bylaw that states otherwise.

If the floor was installed as an upgrade after the condominium was registered, it is considered an improvement and must be covered by your own insurance.

If it is part of the original unit and covered by the corporation’s insurance, and if the damage was caused as a result of your “act or omission,” then you may be responsible for the deductible portion.

If the damage is less than the deductible, you may be responsible for the cost of repairs in this case. It is unclear from your comments whose obligation it is to maintain the air conditioning.

The corporation is bound by the Condominium Act and by its own declaration and other documents.

Though it may seem unfair that you must claim on your insurance policy even though it was not your fault, remember that this is comparable to “freehold home” ownership.

When a freehold home is flooded or damaged, the owner puts a claim through his or her insurance and pays for the deductible even though the owner did not cause the damage.