So you live in a strata, and your upstairs neighbor installed that new dishwasher he was showing you last week. As luck would have it, he’s not the handyman he thought he was, and your suite, and the condo foyer below you, now have a new waterfall feature. How are you and the strata corporation protected?
The responsibility for insuring different parts of a strata building are divided up between different parties:
- The owners of individual units will carry condominium insurance, covering losses such as their personal belongings, or improvements made by the owner to their unit.
- The British Columbia Strata Property Act requires strata corporations to carry insurance covering, among other things, common property and fixtures built or installed by the original developer. This typically covers the buildings shown on the strata plan, common property, strata assets such as furniture, equipment, and so on. The strata insurer will compensate the corporation for the costs incurred to repair the damage to these parts of the building, less the deductible.
That deductible can result in a significant gap. As “leaky condo” cases have become more common, deductibles have increased significantly. Strata policies often have deductibles of $10,000, $25,000 or more, resulting in a sizable deficit in the funds available to repair the damage. The British Columbia Strata Property Act, at s.158(1), provides thatinsurance deductibles are a common expense payable by all lot owners. So on the face of it, all the unit owners in the strata would have to cover that potentially very large deductible.
However, s.158(2) of the Strata Property Act goes on to provide that, although the deductible is a common expense, this does not limit the capacity of a Strata Corporation to sue an owner for the deductible if the owner is responsible for the loss or damage that gave rise to the claim. The question then is, when is a unit owner responsible for the damage to the strata property?
The answer is typically found in the strata bylaws. In the leading case of Strata Corp. VR 2673 v. Comissiona, 2000 BCSC 1240, a unit owner’s toilet broke and the flooding damaged common property and other suites. The Strata Corporation sued the unit owner for the deductible amount of $25,000.00. The BC Supreme Court held that the right to sue is determined by the strata corporation bylaws, rules, and regulations, and examined those to see whether the Strata Corporation could indeed sue the owner for the deductible. In this case, one of the Strata Corporation’s rules provided that, “Any damage to common property caused by the negligence of the owner, occupants of his strata lot, or his guests, will be charged to the owner of the strata lot.” The court held this rule was good enough to allow the suit to proceed.
Some strata bylaws only allow the deductible to be charged to a unit owner if the owner was negligent or otherwise at fault for the damage. Other strata bylaws impose a form of “strict liability”, where the unit owner will be responsible for the damage regardless of whether they were at fault.
In the case of Mari v. OSP LMS 2835, 2007 BCSC 740, the Strata Corporation had a bylaw which stated: “The insurance deductible costs are the responsibility of the strata owner”. The court held that even though the owner had not been negligent, the Strata Corporation could recover its deductible from the owner of the unit from which the water originated, even if the owner was not negligent, reasoning that “The Legislature used the term ‘responsible for’ in s. 158(2) rather than terms such as ‘legally liable, liable, negligent’.”