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Many people who have to wrangle with condominium boards about repairs may often wonder what all those dues are for when it’s so difficult to get anything done. Specifically, the question often arises of who is responsible for repair when there is a fire in an owner’s unit that occurs when it is occupied by a tenant. A recent ruling in Demetriou v. Carleton Condominium Corp. No. 59 demonstrates that condo boards must expeditiously arrange for repairs so that owners do not lose rental income, but do not have to pay for repairs to any improved portions of the unit that are not part of the standard unit. For more on this continue reading the following article from JDSupra.

Section 89 of the Condominium Act provides that it is the Corporation's duty to repair the units and common elements after damage, excluding improvements made to a unit, unless otherwise set out in the Corporation's declaration (as contemplated in Section 91 of the Act). In the event that a unit is damaged by fire, what are the Corporation's specific obligations to the unit owner? This question was recently considered by the court in the case of Demetriou v. Carleton Condominium Corp. No. 59.

A townhouse unit, which was rented to a tenant, was damaged by fire to the extent that the unit became uninhabitable (but there was no structural damage) and almost all of the tenant's possessions in the unit were rendered unsalvageable. The townhouse included a basement washroom which constituted an improvement over and above the standard unit. Neither the owner nor the tenant had any insurance. It took approximately nine months for the Corporation to complete the repairs to the state where it was fit for habitation and an occupancy permit could be obtained. Before starting any work, the Corporation waited several months until the owner signed a letter acknowledging that he would be responsible for the deductible. The Corporation also billed the unit owner over $7,500.00 for the storage and ultimate disposal of the damaged contents in the unit, which the unit owner paid to avoid a lien, as the unit was subsequently listed for sale by the owner. It was the unit owner's position that the unit should have been repaired and ready for occupancy in approximately four months.

The unit owner commenced an action against the Corporation claiming (i) lost rent during the period in which the unit was not habitable, (ii) the amount charged by the Corporation for storage and removal of the tenant's property, and (iii) the cost of replacing bathroom fixtures in the basement washroom which had not been replaced by the Corporation.

The court determined that the Corporation had an obligation to act in good faith, which meant acting expeditiously in ensuring the unit was repaired in a timely manner. The court concluded that (i) the property manager did not push the insurer to complete the work in a timely manner and basically washed his hands of the whole matter; (ii) the Corporation did not remove the tenant's possessions in a timely manner, which caused delay in the commencement of the restoration of the unit; and (iii) the Board's insistence on the owner signing a written acknowledgement that he was responsible for the deductible was not warranted as the Act obliges the owner to pay the deductible.

The court awarded the unit owner damages to compensate him for loss of rental income of the unit for five months. In addition, the court determined that the unit owner should only have been charged for the cost of removing the tenant's possessions from the property and should not have been charged for storage costs for property that was completely unsalvageable. As for the bathroom fixtures in the basement washroom, the court confirmed that it was not the Corporation's responsibility to replace those items as they were not part of the standard unit.

On the basis of what happened in this case, where it is the condominium corporation's responsibility to repair the unit, condominium corporations need to actively pursue the expeditious repair of damage to an owner's unit. Otherwise they may be held responsible for costs that they would not otherwise have had to pay. It should be noted that this case was heard in Small Claims Court. Now that the Small Claims Court limit has been increased to $25,000 it is easier for unit owners to commence legal proceedings against a condo corporation.

This article was republished with permission from JDSupra.