Canada: Condos Q&A: Get Lender To Step In When Condo Fees In Arrears

Last Updated: September 9 2014
Article by Robert Noce

Q: I am a condo board member. One unit owner is more than nine months in arrears of condo fees, totalling about $3,000. We have filed a new caveat on title; this is the second caveat in 15 months. In the first case, the arrears were paid and the account brought to a nil balance in May 2013. Since then, only two months of condo fees have been paid. Furthermore, the City has informed our board that the 2013 municipal taxes have not been paid. The owner has not returned phone calls or replied to letters from our management company. Our board is at a loss. How can we recover the monies owed to the condominium corporation?

A: First, you may want to consider writing a letter to the owner's mortgage company/bank to advise them that the owner is in arrears with respect to condominium fees. Usually, the mortgage company/bank will pay the arrears, as failing to pay your condominium fees is a breach of your mortgage agreement. After the mortgage company/bank pays the arrears, the mortgage company/bank will probably commence a foreclosure action against the owner. If that fails, the condominium corporation may consider beginning its own foreclosure action against the owner. Under the Condominium Property Act, condominium corporations have the same power as banks do with respect to foreclosure. The power is extraordinary and should be used in these types of scenarios.

Helpful hint: Sometimes, owners simply feel that they are under no obligation to pay condominium fees. Therefore, it is important that condominium corporations take a progressive and active role in enforcement, which sends a strong message to delinquent owners. If you are an owner in condo fee arrears, the worst thing you can do is hide; it is far better to communicate with your condo board and arrange a debt repayment schedule, or perhaps you need to get a second part-time job temporarily, or maybe even downsize your property if you cannot meet your monthly expenses.

Q: A few years ago, our condo fees were raised, and then recently raised again. We now pay $710 per month, even though there is a lot of money in the reserve fund. The board has been doing regular upgrades, such as replacing carpet, which we feel are unnecessary. Is there a way to scale our condo fees back again?

A: Every year, boards are required to prepare an annual budget which is then presented to the owners to deal with the expected revenues and expenditures for the year. I cannot tell you that your condo fees should be reduced because I have no information about your condominium's budget. My suggestion is for you to review the budget and financial statements of the condominium corporation and determine whether or not the corporation is collecting excess funds. As well, if you feel some of the expenditures that are being budgeted for are not needed, then you can raise these issues at the annual general meeting. You may also want to consider running for a board position so that you can be a part of the process and be engaged so as to understand why your condominium fees are so high.

Helpful hint: Just because your condo fees are high, that doesn't necessarily mean that the board is spending money unwisely. It is important that boards prepare a proper budget and collect monthly fees to cover the ongoing expenses of the condominium corporation. There is no prize at the end of the year for having the lowest condominium fees in Alberta.

Q: My condominium board has issued a $25,000 special assessment, to be paid over a three-year span, for work yet to be done. Is there any way to get them to extend the payment term to five years?

A: You could write a letter asking the board to extend the time of payment from three to five years. I suspect, however, that the board has a clear reason for wanting the money in place within three years. One would have to look at the report and other materials that the board relied on when it made its decision. My best suggestion is for you to ask the board for an explanation as to why you could not extend the time period from three to five years.

Helpful hint: Boards make decisions based on the best information available to them at the time. Boards should retain professionals to assist them in the decision making process. However, sometimes boards don't consider other options and it is incumbent on owners to suggest alternatives.

Originally published by The Edmonton Journal.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Robert Noce
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