Fees and Finances

Chargebacks

A condominium corporation may charge costs that it sustained because of an owner’s actions or omissions back to that owner through common expense fees. This helps ensure that those costs are not passed onto the other unit owners.

Summary

Condo corporations can charge back costs to an owner through condo fees.

Chargebacks happen when a corporation incurs costs due to an act or omission by an owner.

On this page

What costs can be charged back?
Best practices for condo corporations
Best practices for owners

What costs can be charged back?

The Condo Act sets out situations under which condo corporations can charge back costs to the common expenses of an owner.

Chargebacks permitted by the Condo Act

The Condo Act identifies five circumstances under which a condo corporation can charge back costs:

Repairs and maintenance on behalf of the owner

The condo corporation can complete repairs or maintenance on behalf of an owner and charge them back for this. This can only happen if an owner is required to complete the work but does not do it.

Damage to the unit

Corporations must address damages by an owner, tenant or resident by charging the owner with the cost of the repair or the condo corporation’s insurance deductible limit – whichever is less.

Occupancy related issues

Some corporations have by-laws that limit maximum number of occupants per condo unit. Owners can be charged reasonable amounts for any repair costs or extra utility expenses that are incurred due to contravening this by-law.

Non-compliance with common element changes

Corporations may charge costs plus interest to owners that fail to comply with agreements for improving common elements.

Awards for damages

Corporations can charge an owner for damages and costs obtained in a court order, including legal fees.

Chargebacks allowed under a condo corporation’s declaration

A condo corporation’s declaration may include an indemnification provision. This provision requires that owners reimburse their corporation for costs arising out of their actions or omissions.

Indemnification provisions help protect condo communities by ensuring that one owner’s actions do not financially affect others. For example, if an owner causes a flood that damages several units and common elements, that owner will be required to cover the costs of the condo corporation’s insurance deductible, rather than the condo passing that cost to all owners. These types of provisions often specify that costs will be charged back through the owner’s common expense fees.

In this Superior Court of Justice case a condo corporation attempted to recover compliance and enforcement costs without a court order and was not successful.

That corporation incurred costs because of an owner smoking in their unit and charged these costs back through the owner’s common expenses. The owner disputed this and the court ruled in favour of the owner.

Section 92 of the Act covers the situations under which a corporation can charge back costs to owners for repairs.

Section 105 (2) of the Act details how charge backs for damages are calculated.

Section 57 (4) deals with occupancy related issues.

Section 98 provides more information common element change related chargebacks.

Section 134 has more information on compliance and enforcement

What condo corporations need to know

Condo corporations should follow these steps prior to charging back a cost so they can ensure that they are making a reasonable effort to inform the owner of their options. Chargeback should come as no surprise to the owner.

Corporations should communicate often and proactively with owners who are at risk of incurring costs. Early communication may resolve the issue before it escalates. This can be done through letters, e-mail or notices.
Communications to the owner should:
- Identifying the specific issue
- Identifying the specific provisions of the Condo Act or the condo corporation’s governing documents that are violating
- Giving the owner reasonable options to resolve the issue
If your condo corporation’s governing documents outline a specific timeframe for resolving such an issue, this should be the amount of time you give the owner. If the governing documents do not specify a timeframe, you should give the owner or occupant a reasonable amount of time to resolve the issue.
Clearly state what the condo corporation’s next steps will be if the issue continues. It is a common practice for condo corporations to issue three written requests to resolve the issue and include a clear indication in the third request that the next step will be legal action.
Keep track of these efforts and interactions with the owner.

When dealing with potential issues that may result in a cost that would ultimately be charged back to the owner, condo corporations should always consider low-cost collaborative solutions rather than immediate legal letters or legal action. The approach to resolving an issue will depend on the specifics of the issue, but it is important that condo corporations make a reasonable effort to resolve an issue before resorting to other approaches which may be costly and burdensome for both owners and the condo corporation.

What owners need to know

Owners may wish to reach out to their condo board or their manager to request details regarding the nature of the chargeback, including what provisions of the Condo Act or the governing documents they were contravening.

If you believe you have been charged inappropriately:

Check out the Condominium Authority Tribunal to see if your issue falls within its jurisdiction. You may also want to review the Tribunal’s previously issued orders and decisions involving chargebacks.
You may wish to seek further legal advice if your dispute does not fall within the Tribunal’s jurisdiction.

What If an owner does not pay the chargeback?

The condo corporation automatically has a lien against your condo unit. The lien will cover the unpaid amount owing as well as all interest, and all reasonable legal costs and expenses incurred by the condo corporation in its attempt to collect.