How To Collect Condo Fees / Recourses For Collecting Regular And Special Assesments

Contact the author :  s.fiset@fisetlegal.com

Several recourses exist to enable a syndicate of co-ownership to collect the contributions for common expenses (condo fees) from co-owners who are negligent in remitting these expenses.

a) Personal Recourse

A syndicate of co-ownership can, in order to recover its debt, proceed by personal recourse (i.e. against the co-owner).  In this case, depending on the amount of the condo fees owed by the negligent co-owner, the syndicate of co-ownership may address the court by means of a Motion to Institute Proceedings or a Small Claim Action.  It would use a Motion if the amount involved is in excess of $7,000.  If the syndicate of co-ownership meets the conditions and the claim is less than $7,000, it could recover this amount by filing an Action to the Small Claims Court of Quebec.

b) Hypothecary Recourse

The syndicate of co-ownership may also use a Hypothecary Recourse in order to recover its debt.  In this case, the syndicate would not target the co-owner (personal recourse), but rather his fraction of co-ownership.  This recourse consists of three (3) steps:

1)      The first step involves the publication of a notice of legal hypothec to the Land Registry Office of Quebec.  This legal hypothec of the syndicate of co-owners charges the fraction of the co-owner who has defaulted for more than thirty (30) days on payment of his common expenses and his contribution to the contingency fund.  It is important to note that the legal hypothec covers not only the amount due on the day the notice is registered, but also the expected amount of charges and claims for the current financial year and the next two years.

2)      If the co-owner who is in default fails to repay his debt to the syndicate (pay his condo fees), and the syndicate exercises its legal hypothec, it shall file a prior notice at the Land Registry Office indicating any failure by the debtor to fulfil his obligations, along with a reminder that the debtor or a third party has a right to remedy the default and order the person against whom the right is to be exercised to surrender his fraction of the property or entrust the administration of it in the sixty (60) days following the date of registration of the prior notice.

3)      Failing a response from the co-owner or an interested third party, the syndicate can then undertake a legal recourseto obtain a forced surrender, and to take the fraction in payment (in accordance with the terms of article 1097 of the Civil Code of Quebec), sale it by the creditor (the syndicate) or by judicial authority.

c) Resale Right

In addition to the two recourses outlined above, a syndicate of co-ownership also has at its disposal the privilege of Resale Right.  As stated in article 1069 of the Civil Code of Quebec, a person who acquires a fraction of divided co-ownership, by whatever means, including the exercise of a hypothecary right, is bound to pay all common expenses due in respect of that fraction at the time of the acquisition.  A person contemplating the acquisition of such a fraction may request from the syndicate of co-owners a statement of the common expenses due in respect of the fraction and the syndicate is thereupon authorized to provide the statement to him, provided the syndicate gives prior notice to the owner of the fraction or his successors; in such a case, the prospective purchaser is only bound to pay the common expenses if the statement is provided to him within 15 days of the request.  This deadline is extremely important.  Your syndicate must be ready to respond to all requests (from the purchaser, the notary or lawyer of the purchaser), at any time within this obligatory deadline.  If not, the syndicate loses the opportunity to collect the amounts due from the new co-owner.

d) Temporary injunction (or safeguard motion) to collect common expenses (emergency)

Since May 9, 2008, a new legal weapon was recognized by the Court for situations where a co-owner defaults on his payments and puts the financial situation of the syndicate in peril.  The sanctioning of this rule was implemented as a result of the jurisprudence in the case of Tuli v. Syndicate of co-ownership “Les Jardins de l’Église”.

This decision raises several legal issues in co-proprietorship, which are summarized as follows :

• that a co-owner cannot take justice into his own hands by holding back the contributions for the common expenses of the syndicate, because of claims he may have against his syndicate.
• that, in principle, it is forbidden to obtain through an injunction a court order to force a party to pay, however:
  • that in certain extraordinary circumstances, it will be permitted through a safeguard motion to obtain, before the hearing, the contributions for common expenses owed by the negligent co-owner;
  • that by exception, when the law is clear and apparent, the urgency and other inconveniences when issuing a safeguard motion become secondary;
  • that it is also possible by exception to proceed though a safeguard motion not only for contributions to the regular expenses but also for contributions to common expenses called special or designated as special.

We believe this decision will have an important impact on several cases which are before the court presently, and those scheduled in the future.

In fact, this new legal recourse in the arsenal of a syndicate of co-ownership should allow it, from this point forward, to have immediate access to the condominium fees due by the negligent co-owners when it is urgent.

The information provided on this page is general in nature and cannot compensate for the need to obtain legal advice specific to a particular situation.