Note: The rules and law may have changed since this article was first published. It is provided for archival purposes but you should consult with your lawyer for the current state of the law
If an owner does not pay their condominium fees the condominium board is entitled to charge interest on late condominium fees pursuant to section 59 of The Condominium Property Act, 1993. Section 59 states that late fees will incur interest from the date due until the date paid at a fixed rate determined by a special resolution. The condominium corporation therefore can set the interest rate subject to the limitation in subsection 1.1 which outlines that the interest rate set by a special resolution cannot exceed the prescribed rate. Subsection 59 further outlines that the interest that becomes due is a debt due and owing to the condominium corporation.
In addition to charging interest, if the condominium owner does not pay their fees the condominium corporation can register a lien against the unit pursuant to section 63 of the Act. Section 63 provides that once registered in the land titles system the corporation has a lien against the title for the amount unpaid and the lien can be enforced in the same manner as a mortgage.
If the corporation registers a lien the corporation must do so in accordance with the notice provisions in section 64 and provide written notice of the lien to every holder of an interest whose interest is registered against the title of the unit affected by the interest on or before the date of registration of the lien.
The notice provision will create greater difficulty for the unit holder as it will bring the arrears to the attention of the Mortgagee. Section 63.2 provides that the owner’s default in the obligation to contribute to the common expenses fund and the reserve fund constitutes a default under the mortgage. Therefore, the notice to the mortgagee will put the mortgagor in a worse position.
Condominium corporations should not be intimidated by costs to put a lien on the title. Section 63 of the Act provides that the condominium corporation can charge the costs incurred for preparing and registering the interest and preparing and registering the discharge of the interest to the unit holder.
Owners must be aware that any arrears owing will be reflected against the condo in the estoppel certificate if they try to sell the condo and/or as stated above it will result in them being in default under their mortgage.
It is recommended that if an owner is in arrears a condominium corporation should take immediate steps to collect the amounts owing. For more information or assistance in collecting fees please contact a lawyer for assistance.