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When a rented water tank leaks, who pays?

Suppose your hot water tank springs a leak and wrecks the floor, drywall and paint in your basement.

You can file an insurance claim, but you risk paying higher premiums at renewal time.

If you rent your tank, you can ask the rental company to cover the repairs. Don’t your monthly fees of $15 to $25 protect you from property damage?

Direct Energy and Reliance Home Comfort are the two biggest rental firms in Ontario with 2.5 million customers. They bought the rentals from Enbridge and Union Gas when the utilities were deregulated in 2000.

The two firms don’t maintain or inspect water heaters as they get older. Yet they tend to brush you off when you ask them to shoulder the cost of basement repairs.

Instead, they routinely tell you to file a home insurance claim. They’ll cover the deductible portion that the insurance company won’t pay.

Last March, I wrote about Direct Energy customers who were denied help when their tanks leaked. And last week, Reliance lost a court case involving its responsibility for property damage in a tank failure.

Two homeowners, Geoffrey and Sandra Collett and Shirley Szilvasy, won in small claims court when they challenged the firm’s refusal to help. Reliance appealed to the Ontario divisional court.

The Colletts’ tank was 19 years old and Szilvasy’s tank was 10 years old. That’s an important point, says lawyer Mark Mason of McCague Borlack LLP in Toronto, who represented the homeowners.

The higher court upheld the decisions in the two small claims court cases. Reliance was responsible for damages caused by its tanks, regardless of age.

The company had argued that the implied warranties were no longer in place 10 and 19 years after the tanks’ installation.


About the Author Durham REI

The Durham Real Estate Investor club began in 2008. Whether you are just starting your journey, have been investing for a few years, or are a well seasoned real estate investor the Durham Real Estate Investor Club has many benefits to you.

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