Can My Ontario Condo Charge Me the Insurance Deductible for a Leak?

A pipe bursts, a washing machine hose fails or a bathtub overflows, and weeks later a bill arrives from the condo corporation for its insurance deductible. It is natural to ask whether the corporation can really pass that cost on to you, especially if you did nothing wrong.

The answer depends on who caused the damage and on what your building's by-laws say. This article explains the default rule, how by-laws can widen it, who repairs what, and what can happen if a chargeback goes unpaid.

The default rule: the lesser of repair cost or deductible

Under s. 105(2) of the Condo Act, when damage is caused by an owner, a tenant or a resident, the corporation can charge the owner the lesser of the repair cost or the corporation's insurance deductible.

In practice, that means a small repair is billed at its actual cost, and a large repair is capped at the deductible. The charge is a chargeback, which is a cost the corporation bills to one owner, usually because of that owner's act or omission.

The section cited here is as the Condominium Authority of Ontario describes it. It is worth confirming the exact wording if a large amount is at stake.

When by-laws widen the rule

Some corporations have by-laws that make owners pay the corporation's deductible in more situations, including where no one is directly at fault. If your building has one, a leak that started inside your unit from a failed part could be charged to you even though you did nothing careless.

Deductibles can range from a few hundred dollars to tens of thousands. Owners exposed to these by-laws may need their own coverage for the deductible, often called deductible or loss assessment coverage.

Ontario condos are governed in this order: the Condo Act, then the declaration, then the by-laws, then the rules. If they conflict, the Act takes priority. Whether a particular by-law holds up against the Act is a question a lawyer can look at with your documents in hand.

Who repairs what, and why owner insurance matters

The corporation repairs damage to the standard unit as defined in its governing documents. Owners must repair everything outside that definition, however the damage was caused. The corporation's property insurance does not cover improvements or non-standard elements of units, and fixtures, furnishings, equipment and personal property are generally not part of a standard unit.

• The corporation generally handles the standard unit.
• You handle upgrades, fixtures, furnishings, equipment and personal property.
• You may also face a deductible chargeback, depending on the cause and your by-laws.

No statute is cited as requiring unit owners to carry their own insurance, but the Condominium Authority of Ontario says owners should strongly consider it. It becomes mandatory only if the declaration, by-laws or rules require it. Tenants are not legally required to carry tenant insurance unless the tenancy agreement or the governing documents require it.

If the chargeback goes unpaid: the lien process

If an owner cannot pay chargebacks added to their condo fees and no solution is reached, the corporation automatically has a lien against the unit for that debt. For unpaid common expenses, the lien covers the unpaid amount, interest, and reasonable legal costs and collection expenses. Exactly what a lien for a chargeback covers is worth confirming with a lawyer.

The lien expires three months after the default unless the corporation registers a Certificate of Lien in the Land Registry Office. If it expires, the corporation loses its priority over other parties with an interest in the unit.

• First, the corporation gives you a Notice of Lien.
• If the arrears are not paid within 10 days, it can register a Certificate of Lien.
• The certificate covers all amounts owed under the lien, including later common expenses, interest, and the legal fees and costs of preparing it.
• Fifteen days after registration, it can issue a Notice of Sale Under Lien with a redemption date 45 days later.
• If you still have not paid, it can sue for possession in the Ontario Superior Court of Justice.

You can pay everything secured by the lien at any point until the unit is sold, and the corporation must then discharge the lien. The amount includes arrears, interest, and reasonable legal costs and expenses. How much of the legal costs can be recovered has been contested in the courts, so ask for a breakdown.

Disputing a chargeback, and what is not yet law

A lien tied to an issue within the Condominium Authority Tribunal's jurisdiction can be disputed there. Examples are nuisance, parking, storage, pets, records and settlement compliance. Liens tied to issues outside that jurisdiction, such as repairs, must go to the Superior Court of Justice. Which forum applies to a leak-related chargeback depends on the facts, so it is worth confirming with a lawyer before you file anything.

Amendments to the Condominium Act, 1998 are on the way but most are not yet in force and will start on dates set by proclamation. They include a regulated default standard unit, deductible chargebacks changeable only by the declaration, and lien disputes being excluded from the Tribunal. None of these is current law, so do not rely on them today.

What to do next

• Ask the corporation in writing for the invoice, the repair costs, the insurance deductible and the cause of the damage.
• Get a copy of your declaration, by-laws and rules and find the standard unit definition and any deductible by-law.
• Check your own policy for deductible or loss assessment coverage and report the loss to your insurer promptly.
• Do not ignore a Notice of Lien: the 10-day window matters.
• Keep photos, plumber reports and all correspondence.
• Speak with a lawyer before paying a large chargeback or if a lien is registered.

Frequently asked questions