No matter what we do to mitigate disasters, disasters will still happen. Disasters like fire, flood, or a tree falling on a roof. We have insurance because disasters happen in our lives. The purpose of insurance to help us get back on our feet when after disaster happens. What happens when a disaster like a flood happens during a tenancy?
The Disaster
The Tenant decides to go on a nice, long vacation to escape the cold and bitter Canadian winter. The Tenant asks their good friend to check on the house. Before the Tenant left for their vacation, they made sure to turn off the water and turn down the heat. The Tenant left detailed instructions for the good friend on how turn the water back on and how the thermostat works. Since the Tenant is going to be gone for an extended period of time during the middle of winter. The Tenant is taken steps to mitigate any potential issues from happening.
The good friend is over one day checking on the house, the good friend decides to turn on the water and turn up the heat while they spend the day at the Tenant’s house. As the good friend leaves the house, they remember to turn down the heat and forgot to turn off the water.
The next day, a deep freeze happens. The temperature drops to -35 Celsius. The good friend decides it’s too cold to go check on the Tenant’s house during the deep freeze. Unfortunately, the pipes in the house freeze solid since the water was never turned off and the heat was turned down.
A few days after the deep freeze, the good friend decides it’s time to check on the house. At first, the good friend notices nothing wrong. The good friend decides to turn on the heat and spend some time at the house. When the good friend goes to leave, they do their final check of the house. That’s when the good friend notices that there is severe flood going on in the house. The flood happened because the pipes burst when the ice in the pipes started to melt.
The good friend quickly calls the Tenant and tells them what happened. Thankfully, the Tenant has contents insurance. After getting the news, the Tenant immediately calls the Landlord and tells them what happened.
What Happens Next
The Landlord gets a contractor to come and assess the damages. This is when the Landlord finds out it is going to cost $35,000 to repair the flood damage. The Landlord contacts the Tenant’s insurance company and tells them that they have pay for the damages. The reason for this is because their insured had a guest over at the house who then caused the flood. The Landlord’s position is that the Tenant is at-fault for the flood. Now everything is going to get trickier. It turns out the house is part of condominium complex. Turns out there is a section in the Condominium Corporation By-Laws that says:
waivers of subrogation against the Corporation, its directors, officers, manager, agents, employees and servants and against the Owners, and the Owners’ respective residents, tenants, invitees or licensees, except for damage arising from arson, fraud, vehicle impact, vandalism or malicious mischief caused by any one of the above;
What Does that Mean?
That section means that in event of a disaster, no one file an insurance lawsuit against another party unless the reason for the lawsuit is one the exceptions listed. Nor can an insurance company go after the person at-fault for the damages. The question becomes how does the Landlord recoup the cost for the damages?
The Landlord’s Next Steps
The Landlord can issue a N5 to the Tenant claiming that the $35,000 can be paid within seven days or the Landlord will proceed forward with eviction and claim the damages in a Landlord and Tenant Board application.
If at this point, if the Landlord does not have property insurance, they really should get insurance on the property. Having insurance will greatly mitigate future issues for the Landlord.
What can the Tenant do?
Ultimately, the Tenants’ options boil down to: the Tenant can either pay the $35,000 or dispute the notice. When it comes to disputing the Tenant does have access to several defences available to them. These defences range from technical to general. Some technical defences the Tenant can rely on are:
- Did the Landlord fill out the N5 correctly?
- Does the Landlord have their own insurance?
When it comes to the general defences, the Tenant can rely on how long it took for the damages to be repaired, other outstanding maintenance issues, and other such defences.
It is extremely important to note, that these defences are 100% fact specific. A technical defence may not be available to one person or another person has very few defences available to them.
Outside of the defences, the Tenant may have the option to go on the offence and file their own application against the Landlord.
What about the Tenant’s Insurance Company?
Some insurance policies have a clause in there that they will defend a claim against the insured. The insurer’s job is not to defend the eviction, it is defend the claim for damages. If rent arrears are being included, the insurance company won’t defend those either. Nor will the insurance company go on the offence against the Landlord. At the end of the day, the N5 is putting the Tenant on notice that there is a going to be claim for monetary damages against the Tenant.
