A pipe burst in the condo above you. Who pays for the repair?

A widely shared post on a Toronto real estate forum this week described a condo owner staring at a repair estimate in the tens of thousands after a leak — and no clear answer on who owes it. The replies were the usual mix: "the corporation pays," "your insurance pays," "the upstairs neighbour pays." All three can be right. Which one applies to you depends on documents you were handed when you bought and probably never opened.

Here's how the rules fit together.

The default: the corporation repairs, then decides who pays

Ontario's Condominium Act, 1998 starts from a simple rule. Under section 89, the condominium corporation is responsible for repairing both the common elements and the units after damage. Under section 99, it must carry insurance on the building — including the units — for major perils, and water damage from a burst pipe is usually one of them.

So when a pipe fails and three units below get soaked, the corporation's insurer is normally the first payer, and the corporation organizes the repair. That's the part most owners get right.

The part they get wrong is what "the unit" means, and what happens with the deductible.

The standard unit by-law draws the line

The Act lets a corporation pass a standard unit by-law that defines exactly what the "unit" consists of for repair-after-damage purposes: the drywall, the builder-grade flooring, the original kitchen, and so on. Everything an owner added on top — engineered hardwood, a quartz counter, pot lights, a glass shower — is an improvement, and the corporation has no obligation to put it back.

That means two neighbours with identical water damage can have very different bills. The owner with original finishes gets a full restoration from the corporation's claim. The owner who renovated gets the standard unit back, and everything else comes out of their own personal condo insurance — or their pocket.

The question to ask before you buy: does this building have a standard unit by-law, and what does it say? If there isn't one, the definition falls back to the declaration, which is where the arguments start.

The deductible is where the money is

Corporation policies carry deductibles that have climbed sharply over the past decade — five-figure water deductibles are now ordinary in Toronto towers, and some run higher. Section 105 of the Act sets out who eats it:

• By default, the deductible is a common expense — everyone shares it.
• If the damage was caused by an owner's act or omission, the corporation can charge the deductible back to that owner, up to the cost of repairs.
• If the corporation has passed a by-law under section 105(3), it can extend that chargeback further — many Toronto buildings now charge the deductible to the unit where the water originated, whether or not anyone was careless.

Read that last point again. In a building with a section 105 by-law, a hose that fails behind your washing machine while you're at work can leave you owing the full deductible, even though you did nothing wrong. Your personal policy's loss assessment or deductible assessment coverage is what protects you, and the limit needs to be at least the building's deductible.

What the City's record adds

None of this is in the City's files — the Act, the declaration and the by-laws are private-law documents you get through the status certificate. But water damage often has a building-level cause, and that does show up in public records:

• Orders — a recurring plumbing or building-envelope problem can generate an Order to Comply against the corporation. Search the address in orders.
• Permits — repeated permits for riser replacements, roof membranes or window-wall repairs tell you the building has a known water problem and is paying to fix it. Permits shows each job and whether it closed.
• Investigations — bylaw complaints about property standards can flag the same issues from the tenant side. Check investigations.
• RentSafeTO — for buildings that get scored, the report card includes the City's inspection of common areas, including water-related items.

We walked through how to line these records up against a status certificate in The status certificate is the condo's side of the story, and what an unresolved order costs a buyer in What an open work order means when you're buying.

If you're a tenant in the flooded unit

Different rules. The landlord — the unit owner — is responsible to you under the Residential Tenancies Act, and the condo fight is theirs to have with the corporation. We covered that side after last month's storms in The storm flooded your rental. Now there's mould.

Before you buy, and after

When you get the status certificate, find three things: the standard unit by-law, any section 105 deductible by-law, and the insurance summary with the water deductible amount. Then pull the property snapshot for the address and open the orders and permits tabs. If the corporation is already fighting a water problem, the record will usually show it before the board tells you.

Once you own, monitoring the address means the next order or permit reaches you when it's issued — not two years later in someone else's status certificate.

This is general information, not legal advice. Every corporation's declaration and by-laws are different; have a condo lawyer read yours before you rely on any of the above.