Tuesday, October 03, 2006

Late Condo Fees - What to Do?

Dear Betty
As treasurer of a Condominium Corporation I do the deposit of fees within the first couple of days of the new month. We consistently have a few people who are late payers, they are from days to months behind. I find this very frustrating when it comes to doing the books. These same people inform me that I am out of line asking for the fees to be available by the first day of the month (our condo bylaws state that fees are due the first of the month and that 12 postdated cheques are requested). I have also been asked to invoice for the condo fees. I feel is out of the question as for one thing I am a volunteer and I feel when someone buys a condominium unit they should know the obligation they have committed themselves to. Can we charge a penalty on these late fees? If they continue to go unpaid can we recover the late fees and penalties through the Estoppel certificate when these people sell their units? Do you have any other suggestions on how to deal with this problem? If I phone these people they are very nasty and say I am going over the top on this issue, in the meantime we are hundreds of dollars behind in fees.

Thank-you , Concerned Treasusrer and Board member.


Dear Concerned Board Member,

You are not the first to be experiencing the resistance of owners paying fees on time and the lack of respect for fellow owners when the need for the condominium fees to be paid in a timely manner is ignored. The bylaws for your condominium will state the process for unpaid fees and can include charging interest after the "specified number of days" are achieved, with the fees unpaid. Interest is to be charged in accordance with the bylaws and is not to exceed 18% annually.

Bylaws also may have a "Fining for Breach of Bylaws" provision which enables the Board of Directors to impose a monitory fine for not paying the fees withing the time period specified in the bylaws. (this action can only be implemented if the bylaws have this wording, in compliance with the Condominium Property Act of Alberta)

Should an owner choose to sell their unit and the fees are unpaid, yes, the Estoppel certificate would show that there are outstanding fees and interest charges. These outstanding amounts would then be required to be paid either by the seller of the unit or the new buyer, dependent on the working in the Purchase Contract. (all Purchase contracts should have a condition that the Seller pay any and all outstanding condominium fees, special assessments and interest charges).

The bylaws typically state a period in which, if the fees remain unpaid, the action that the Board of Directors is to take, is to register a Caveat for Unpaid Fees and Special Assessments, including Interest, against the Unit title. This period is typically 90 days. If the bylaws do not have such a clause, the Board of Directors can adopt a policy stating the period of time that will result in a Caveat being registered. Once the Board had decided to act on this bylaw or to adopt a policy it is important to send a notice to all owners informing them of this intent or policy. A notice should be sent to all late fee payers informing them of the policy and requesting that they pay the outstanding fees and that they keep them current. Be sure to establish a date that late fees are to be paid and clearly state the action(s) that will be taken should they continue to be late or remain unpaid.

Another action that can be taken is to inform the Mortgage company, found on the title to the unit, that this owner is in arrears on their condominium fees. Lender will often pay the arrears and deal with the owner.

Once a Caveat has been registered on the title you are required to send a notice to the owner(s) and the lender shown on that title, informing them of the registration and the reasons. Once the caveat is registered the Board of Directors can begin proceedings to Foreclose on that unit to collect the late fees owing.

If the unit is occupied by a tenant and not the owner, the Board may send a letter to the Tenant & the Owner directing the tenant to pay the rent to the Condominium Corporation until such time as all arrears are paid. Any surplus, after arrears are paid, is to be paid to the Owner.

Often owners in a condominium forget or don't really understand that when the fees are late or remain unpaid for any period of time, the result is a shortage in funds to operate and maintain the building and provide the services. The Board of Directors have many solution as there are many consequences when fees remain unpaid: (a few examples)

  • when a building goes without repair, services, or has evidence in the minutes, that owners do not care enough about their investment to pay their share of the costs (the fee), when a buyer is examining the operations of the corporation (having a professional Condo-Check Document Review) completed, they may offer a lower price or not buy in this condominium project due to the stress of needing to manage short of funds due to this problem,
  • no-one wants to volunteer to be on the Board of Directors as it is stessfull to be constantly chasing fellow owners for money,
  • when there is a cash shortage the only option left for the Board of Directors is to call for a Special Assessment (a cash call) at which time the owners who do pay on time are now required to pay again to cover the shortfall which is due to other owner not paying their fees, and
  • Professional mangers and trades and services will not provide services or offer preferred pricing to Corporations who are stressed financially.

I hope this brief response will give you the options and information required to get the attention of these late payers. If your bylaws do not allow your Board of Directors to charge for late fees or to fine owners for breach of bylaws please hire a condominium lawyer to have them updated.

Thank you for your question....Cheers!

25 Comments:

At February 26, 2009 at 7:11 PM, Blogger Strathaven Court Condominium said...

As the treasurer of our condominium our board has established a policy regarding non-payment of fees. for 2 months we write to the owner. at the end of 3 months we again write the owner with a copy of the letter to the mortgage lender and request payment of the outstanding account which includes each month a $50.00 non-compliance (with our by-law) fine. This process has worked quite well for our board.
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At May 5, 2009 at 2:22 PM, Blogger Unknown said...

Dear Betty,

please advice! i purchased my Condo in April 2008 in Calgary. As a responsible person to all my payments, i made an immediate phone call to Asset Management Company. I told them that i have just moved and would like to start paying my Condo fees. The representative, told me that they would send me welcome package which will include payment instructions. About 20 days later i received a letter from the company with instructions for the payment. I sent them void cheque and they started deducting money from my bank account a months later. I had no idea that they did not deduct condo fees for first two months (April and May). In October, 2008 i received Caveat warning from the company that i owed some money to them and had to make immediate payment. As i had no idea about missing payment, i made immediate phone call to the person signed on the letter. I told her that i would make immediate payment however, need explanation why i owed the money. She promised to get back to me if i really owed anything and she never did. I received Caveat on my apartment only 10 days later with additional legal fees. I called the company and the lawyer and explained to them that it was company representatives mistake not to inform me properly. I have all recordings to prove that i made all efforts for payment. Currently, the company refuses to waive the legal fee (i have already paid missing condo fees). I feel like i have been put in unfair situation by the lack of coordination and management in the company.
Now, i want to take them to court. it is not about 300$ legal fees but it is about not being treated fair. my question is what are my chances to win the case in the court? I have a prove that i made efforts to pay but the company representative did not implement her responsibility. what does law say?

 
At May 5, 2009 at 2:23 PM, Blogger Unknown said...

This comment has been removed by the author.

 
At April 5, 2010 at 8:51 PM, Blogger TG said...

I need some clarification on this topic. Can we charge an administration fee for resending documents out the second month of non-payment and for each month there after. We have inplemented a $200 fine after the 3rd month.

 
At May 18, 2010 at 2:24 AM, Blogger lisa_d said...

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At July 25, 2011 at 11:06 PM, Blogger paula said...

Great to read about this on what to do on the late condo fees.

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At November 14, 2011 at 3:56 AM, Blogger Unknown said...

There should be a limit on up to when shall the payment be made, and if late, how long shall it be given a chance to paid immediately. A letter of notice should be given to those who have not paid their fees yet to remind them.

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At November 18, 2011 at 3:08 AM, Blogger Unknown said...

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At July 30, 2012 at 1:06 PM, Blogger Unknown said...

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At October 28, 2012 at 6:40 AM, Blogger jenelynp said...

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At November 21, 2013 at 10:28 PM, Blogger rengel said...

Dear Betty,

I have a similar query to Jon. My sister recently paid about $4000 in fines and legal fees for a $252 special assessment that she was late in paying by less than 90 days. I understand that she was late but the penalties and fees seem very excessive relative to the amount of the assessment given that she is current with all of the other fees (including other special assessments). I haven't reviewed the condo by-laws so this could all be within the Board's powers but somehow it seems unfair. Does she have any recourse?

 
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