New to the Condominium Way of Life?

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A Post for those New to the Condominium Way of Life

If you have never lived in a condominium (“condo”) before or have recently moved into one, you may find that you have some questions about matters such as your condo fees and the authorities that the condo’s board of director has. This is the first in a series of interview-style posts that seek to answer some of those questions so that you can navigate through the condo world (hopefully) without any issues. 

We hope that you find these Q and A style posts helpful!

Q: Where do my condo fees go? To whom do I pay them?

A: All payments for condo fees, including monthly fees, special assessments, or other charges, should be payable to the condo. Payments should not be payable to the superintendent, a director, officer, manager or the management company for the condo. The condo’s by-laws may describe the permitted payment options, such as post-dated cheques or electronic funds transfer (EFT) (which is sometimes called pre-authorized payments (PAP)). Most condos do not accept cash payments. The payments are usually delivered to the manager to deposit to the condo’s bank accounts.

Q: What are the condo fees used for?

A: The fees collected from owners are used to pay for the common expenses of the condo, such as maintenance and repairs, utilities (if individual meters are not installed for the units), and professional fees (i.e. for the condo manager, lawyer, engineer, and auditor). The condo’s declaration and by-laws should describe the common expenses in detail.

Q: What happens if I do not pay my condo fees?

A: A condo’s primary source of revenue is from monthly fee payments from its owners. If owners do not pay their share of the costs the condo may not have sufficient funds to pay its bills as they become due.

Q: What are the repercussions of not paying my condo fees?

A: If an owner does not pay their share of the common expense the condo may register a lien against their unit under section 85 of the Condominium Act, 1998. A lien is similar to a mortgage as it permits the condo, like a mortgage lender, to sell the unit if the owner defaults in their obligations. The condo is also entitled to collect interest on the arrears, collection costs (i.e. manager’s fees to send notices of arrears), and legal costs. The lien is not discharged until the condo receives payment in full.

Q: What if I can’t pay right now simply because of COVID?

A: While it is unfortunate that some owners may struggle to pay their condo fees because of the pandemic, it does not change the fact that they are legally required to pay according to the Condominium Act, 1998 and the Declaration. The courts have confirmed that an inability to pay condo fees is not a defence to an action by a condo trying to sell an owner’s unit. A condo may agree to a payment plan with an owner to give them more time to pay their condo fees, but this should not be expected by an owner as it is rarely an option. In short, the owner must find sufficient funds to pay the condo on time or the condo could sell their home.

Special thanks to Zach Powell, summer student at Robson Carpenter LLP, for asking the questions owners want to know and preparing this post.

Have a question you think new owners need to know? Send it to us and you may see it in a future post.

Fight over 14% budget increase leads to court battle

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Most unit owners would be upset to receive notice that their monthly condo fees were increasing by almost 15% the following year. Recently an owner was surprised when she received notice from her condominium of a 0% change in her monthly fees.  She was expecting an increase close to 15%. Was she pleasantly surprised? Apparently not as she commenced an application in the Superior Court of Justice against the condominium and one of its five directors.  Continue reading

Ambiguous Condo Docs Cause Another Dispute

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bookI’m often asked to review condominium documents because the language used is not clear. One reason is the legalese used by many lawyers when drafting the documents. (“Now herewithin witnesseth” really?). Do we think it makes us sound smart? Whatever the reason, it needs to stop!

If we want the owners to read the documents (and we should) we need to make them easy to read. The owners shouldn’t need a law degree to understand them! Plain, clear, and unambiguous language needs to become the norm.

Why am I ranting about this today? Because I just read another case where a dispute arose because of unclear language in the declaration.

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Chargeback or Fine?

I’m often asked by directors if they can fine owners for unruly or disruptive behaviour, like excessive noise or improper parking. The simple answer in Ontario is no. While a condominium cannot fine an owner, it may be able to charge some costs back to the offending unit owner in certain circumstances. This process is typically referred to as a “chargeback”.

The Condominium Act, 1998, is clear that a condominium may only lien an owner for “common expenses”, which according to the Act are “expenses related to the performance of the objects and duties of a corporation and all expenses specified as common expenses in this Act or in a declaration”. It is noteworthy that it says the Act or declaration, not the by-laws or rules. This seems to suggest that an indemnification clause in a by-law or rule is not sufficient, in itself, to support a lien against a unit for a chargeback.

A provision in a by-law or rule may be sufficient to support a lien against a unit for a chargeback if it is authorized by the Act. For example, a condominium may pass a by-law extending the circumstances where a deductible may be charged back to an owner. While the provision is within a by-law, it is enforceable because of section 105 of the Act, which authorizes a condominium to pass such a by-law.

This is a controversial topic. Many lawyers ignore the definition of “common expenses” in the Act and rely upon provisions in rules and by-laws, without further support, to charge costs back to owners. If you have any doubts about the condominium’s ability to charge back an amount to an owner you should discuss it with the condominium’s lawyer or property manager.

For more information, see the Ontario government’s website.

 

Condominium Fines & Chargebacks

Every so often I have a client ask me if they can fine a unit owner because of behaviour that is annoying (i.e. constantly paying their fees late) or unsavoury (i.e. rude or vulgar language). Unfortunately for condominiums (and fortunately for the offending owners), condominiums in Ontario cannot fine unit owners for their undesirable behaviour. However, there are other charges that may be levied against a unit because of the behaviour of the unit owner or occupant. These are typically referred to as “chargebacks”.

Continue reading