Canada: What To Expect When A Unit Owner Fails To Pay Condominium Fees

Condominium ownership creates a unique style of living. It forms the requirement of owners and those who live in the condominium to live symbiotically. One aspect of this relationship is sharing the common and capital costs required for upkeep and management of the condominium.

The Condominium Property Act, 1993¹ (the "CPA") establishes that a condominium corporation is responsible for all expenses and liabilities incurred with respect to the common property and common facilities². Section 55 of the CPA requires a condominium corporation to establish both a common expense fund and a minimum of one reserve fund.³ The common expense fund receives contributions from the owners, which are used for the control, management, and administration of the common property, common facilities, enforcement of the bylaws, insurance premiums and all other expenses incurred in the discharging of corporation duties.⁴ Reserve funds are established for the purpose of covering unforeseen common expenses or major repairs or replacements the corporation may require.⁵ These fees are charged via a monthly charge to the unit owner, for the benefit of the corporation. Owners, under the CPA, have an express duty to pay their contributions.⁶ But what remedy does a corporation have against an owner who fails to pay their monthly condominium fee, thereby failing to contribute to the corporation's established funds?

The CPA enables the corporation to register a lien against the title of a unit for the amount of a contribution to the common expense or reserve fund levied on the owner for which has not been paid.⁷ Upon registration of the lien, the corporation holds a lien against the owner's title that is equal to the amount of the unpaid contribution, the costs of registration, interest and any associated discharge fees.⁸ Provided the corporation give the required written notice,⁹ once the lien is registered, the CPA provides the corporation a super-priority over any registered or unregistered lien even if the other interest existed prior to the registration of the lien,¹⁰ other than those for taxes or prescribed by the CPA.¹¹

Once the lien is registered, the corporation has two primary ways to collect pursuant to the lien. First, the CPA imparts additional terms and conditions into mortgages held on condominium units. Section 63.2 of the CPA states that any mortgage unit is deemed to contain the terms found in this section. The section states that any arrears of an owner's contribution may constitute a breach of their mortgage,¹² and allows the mortgagee to collect the owner's contribution and remit it on their behalf to the corporation.¹³ The second means of collection is by virtue of the statutory lien granted to the corporation. Section 63(2)(b) states that the lien may be enforced in the same manner as a mortgage. Therefore, the CPA grants the corporation the ability to foreclose against the unit for the contribution arrears, in the same way a bank would foreclose on a private dwelling, given the potential of taking title to the property or forcing a judicial sale, as well as a costs award for the proceedings.

Although generally consisting of small monthly contributions, special assessments made against units can increase the amount due and owing to the corporation, which if unpaid, can cause a corporation to lien a unit. Unit owners and corporations alike should be reminded of the corporations' duty to enforce their bylaws. Unit owners should avoid going into arrears of their contributions to avoid being engaged in the enforcement process. Corporations should be reminded that although they are small, there is a requirement of them to take steps to collect and enforce for contribution arrears pursuant to their statutory duties.

This article, What To Expect When a Unit Owner Fails To Pay Condominium Fees, is part of a series relating to the issues of Condominium Law in Saskatchewan, written by Saskatoon associate, Taylor L. Wilcox. Follow us on LinkedIn and get notified when the next article in this series is published. This post is for information purposes only and should not be taken as legal opinions on any specific facts or circumstances. Counsel should be consulted concerning your own situation and any specific legal questions you may have.

Footnotes

1. The Condominium Property Act, 1993, SS 1993, c C 26.1 ("CPA")

2. CPA, at s.54

3. CPA, at s.55(1)

4. CPA, at s.55(2)

5. CPA, at s.55(3)

6. CPA, at s.54

7. CPA, at s.63(1)

8. CPA, at s.63(2) and (4)

9. CPA, at s.63.1(3)

10. CPA, at s.63.1(1)

11. CPA, at s.63.1(2)

12. CPA, at s.63.2(1)(b)

13. CPA, at s.63.2(1)(a)

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.