Fees and Finances
Chargebacks
A condominium corporation may charge costs back to an owner through condo fees because of something that owner did or didn’t do. This helps ensure that those costs are not passed onto the other unit owners.
What costs can be charged back?
The Condo Act sets out situations where condo corporations can charge back costs to owners through their condo fees.
Chargebacks permitted by the Condo Act
The Condo Act identifies five circumstances under which a condo corporation can charge back costs:
Additional chargebacks allowed under a condo corporation’s governing documents
Condos can update their governing documents to include additional scenarios that require an owner to pay for chargebacks.
For example, if a flood that damages several units is caused by one owner, they may be asked to cover the costs of the corporation’s insurance deductible or repairs – whichever is less – rather than the condo passing that cost on to all owners.
Adding additional scenarios like these to its governing documents doesn’t allow corporations to chargeback owners for compliance-related costs, like expenses for sending legal letters, without permission from the CAT or the courts.
The chargeback process
Chargebacks should never come as a surprise. Condo corporations should make reasonable efforts to communicate with the owners in advance, outline their options and work collaboratively to resolve any issues. Proactive communication helps avoid escalation.
Follow these steps before charging back costs:
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- Communicate early and often: Use letters, emails and notices to inform the owner whose actions may lead to additional costs.
- Ensure communications include:
- A clear description of the issue that could result in charging back costs
- References to the relevant sections of the Condo Act or the condo’s governing documents being violated
- Reasonable options to resolve the issue
- Allow reasonable time for resolution: Check your corporation’s governing documents for any required timelines before charging back costs.
- Explain your corporation’s escalation process: Inform them of the next steps. For example, many corporations issue three written notices requesting a resolution, with the final notice indicating that legal action will follow if the issue is left unresolved.
- Document efforts and interactions: Keep detailed records of all communications and steps taken with the owner.
Corporations should always consider low-cost, collaborative solutions instead of immediately resorting to legal action. Making efforts to find early solutions together can avoid costly and inconvenient options for the owner and corporation.
If the issue is still not resolved after taking these steps, condo corporations can charge back costs to the owner through condo fees and by following requirements outlined in the Condo Act and its governing documents. Corporations cannot chargeback owners for compliance-related costs, like expenses for sending legal letters, without permission from the CAT or the courts.
What owners do if they can't pay chargebacks?
Owners should communicate with their condo corporation right away if they are unable to pay their condo the chargebacks. The corporation may be able to agree to a payment plan with them or allow the owner to continue paying their condo fees while they address arrears.
If a collaborative solution is not possible and the owner cannot pay their increased condo fees due to chargebacks, their condo corporation automatically has a lien against on the owner’s unit to recoup the debt.
Can owners dispute chargebacks at the Condominium Authority Tribunal?
It depends on the issue that led to the chargeback. Owners can only dispute a chargeback at the Condominium Authority Tribunal if the issues that led to the chargeback are already within the CAT’s jurisdiction. Everything else must be disputed at the Superior Court of Justice or through private mediation or arbitration. If you are unsure, you will first need to find out why you are being charged back before taking any other steps.
Chargebacks within the CAT’s jurisdiction:
The CAT has jurisdiction over:
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- Nuisances such as noise, vibration, smoke, vapour, light, odour.
- Parking, storage, vehicles, pets, animals and other nuisances such as harassment, but only if your condo corporation has provisions in their governing documents regulating these activities.
- Condo records
- Compliance with settlements that parties have come to in previous CAT cases
Chargebacks related to disputes outside the CAT’s jurisdiction:
Every chargeback resulting out of an issue not listed above must be taken to private mediation, arbitration or the Superior Court of Justice. Some common examples of chargebacks that must be handled outside of the CAT are chargebacks relating to repairs and damage.