Who Is Responsible for HVAC Leaks in a Condominium?

Water leaks inside condominiums create immediate panic — especially when the water is coming from the unit above. Multi Residential buildings often are subject are dispute when dealing with unexpected water damage. Here we discuss more in depth how chargeback decisions are made by property managers and insurance companies.

The first reaction is almost always:

“The upstairs neighbor caused it, so they must pay.”

In Ontario condominiums, that is often not how responsibility is determined.

Responsibility depends on the Condominium Act, the corporation’s bylaws, the standard unit definition, and insurance structure — not simply where the water came from.

This article explains exactly how liability for HVAC leaks is determined in Ontario condos.

Why HVAC Systems Cause So Many Condo Leaks

The most common insurance claim in condominium buildings is water escape.
Typical HVAC-related causes include:

• Heat pump or Fan Coil condensate overflow

• Clogged HVAC riser drain lines

• Frozen coils

• Burst hoses

• Failed valves

• Sweating risers

• Condensation inside walls

Unlike a kitchen flood, HVAC leaks are slow and vertical — meaning they frequently damage multiple units before being discovered.

That is why condo law treats them differently than a typical homeowner claim.

The Three Types of Property Inside a Condo

Every leak investigation starts with identifying what was damaged.

1) Common Elements (Corporation Responsibility)

Usually includes:

• Vertical riser pipes

• Mechanical rooms

• Building HVAC infrastructure

• Shared duct systems

• Structural components

The corporation repairs these.

2) The Standard Unit (Corporation Insurance)

Each condo defines a “standard unit” usually referred to the baseline version of the suite when the condo was originally constructed.

This typically includes:

• Original drywall

• Builder flooring (sometimes)

• Original fixtures

• Some HVAC components depending on declaration

If the damaged item is part of the standard unit, the building’s insurance restores it.

3) Improvements & Contents (Owner Responsibility)

Anything upgraded belongs to the owner:

• Hardwood flooring upgrades

• Cabinets and countertops

• Renovations

• Furniture and belongings

Owners insure these separately.

The Most Misunderstood Law — Section 105 of the Ontario Condominium Act

This section determines who pays after damage occurs.

Default Rule

The condominium corporation pays the insurance deductible as a common expense shared by all owners.

However — and this is the part most residents never hear — there are two major exceptions.

Exception 1 — Owner Caused the Leak (Act or Omission)

If the damage was caused by the owner, tenant, or contractor:

Examples:

• Disconnecting HVAC drain

• Blocking airflow causing condensation

• Improper installation

• Ignoring known leak

• Appliance overflow

The corporation can charge the owner:

The lesser of the deductible OR the repair cost

This is not a lawsuit — it is a legal chargeback.

Exception 2 — Deductible Chargeback By-Law (Very Common Today)

Most modern Ontario condos have a by-law passed under Section 105(3).

This allows the corporation to charge the originating unit owner the deductible even if nobody was negligent.

Meaning:

If the water started in your unit, you may pay the deductible even when it was an accident.

This is now standard because water deductibles in high-rise buildings are extremely high.

Typical Deductibles in Toronto Condos

• Older buildings: $10,000 – $25,000

• Typical high-rise: $50,000 – $100,000

• New towers: $100,000 – $250,000+

So If the Upstairs Unit Leaks — Who Pays?

Here is the real decision chart.

Scenario A — Owner negligence

Upstairs owner responsible → their insurance pays

Scenario B — Equipment failure inside their unit

If deductible by-law exists → upstairs owner charged deductible
If no by-law → corporation pays

Scenario C — Building pipe or common element

Corporation responsible

Scenario D — Renovation damage

Owner responsible

Important: The Owner Usually Does NOT Pay Personally

When the originating unit is charged, it does not usually mean they write a cheque.

Instead:

Owner → submits claim → condo insurance pays corporation

This uses a specific coverage called:

Loss Assessment / Deductible Coverage

The Coverage Every Condo Owner Must Have

Because of large deductibles, basic policies are no longer enough.

Recommended minimums in modern Ontario condos:

Without this coverage, an owner may personally owe tens of thousands of dollars.

Real Example (HVAC Leak)

Heat pump drain blocks → damages 4 units
Building deductible: $100,000

With insurance

Owner pays $1,000 deductible
Insurance pays $99,000

Without insurance

Owner owes $100,000 and can be lined

Why This System Exists

Condominiums operate on shared risk.

If every accidental leak was paid by all owners, fees would skyrocket.
So the law assigns risk to the unit where the incident originates.

This protects the building as a whole.

What Boards and Owners Should Do Before a Leak Happens

Boards

• Confirm deductible by-law

• Review standard unit definition

• Identify HVAC responsibilities

• Educate residents

Owners

• Carry proper insurance

• Maintain HVAC annually

• Never modify equipment

• Report small leaks early

The Key Takeaways

In a condominium:

Water source does not determine responsibility — governing documents do.

Most disputes happen because people apply house logic to condo living which is a shared living space.

But legally:

The originating unit often pays, even when nobody is at fault — and insurance is designed for exactly this situation.

---

About the Author

Kevin Moeini is a CAO-certified condominium director and HVAC specialist working with high-rise mechanical systems across Toronto and the GTA, focusing on leak prevention, risk mitigation, and infrastructure planning.