Condo living has multiple benefits. The amenities make up for smaller living spaces, and residents appreciate that they never have to pick up a snow shovel or clean gutters.

However, densely populated condo and strata buildings do have some drawbacks. For example, when one member ignores rules or bylaws, it can impact neighbours above, beside and/or below them. For that reason alone, condo boards and strata councils must be diligent about correcting dangerous or disruptive behaviour.

  
 
Download our free chargeback letter template

  
 
Chargebacks are one way residential communities can preserve peace and property values. Read on to find out why condos and stratas pass on costs to individual owners in some cases.    

  

Table of contents

• What are chargebacks?
• What costs can be charged back?
• Why not fine an owner?
• Steps for issuing chargebacks
• What if the chargeback notice is ignored?

  

What are chargebacks?

Chargebacks are fees that a corporation incurs as a result an act or omission by an owner.
A condominium or strata may charge costs that it sustained because of an owner’s actions or omissions back to them through common expense fees.

By doing this, the corporation doesn’t have to use money from condo/strata fees to pay for repairs or legal expenses. In other words, owners don’t pay to solve problems caused by one individual.

  
 
What costs can be charged back?

Not all provinces charge back costs, but Ontario and British Columbia do.
In Ontario, the Condominium Act explains when condo corporations can charge back costs to the common expenses of an owner.
 
Repairs and maintenance on behalf of the owner
A corporation can complete repairs or maintenance on behalf of an owner and charge them back for this. This can only happen if an owner was required to complete the work, but did not do it within a reasonable amount of time.

  

Damage to a unit or common area
Corporations must address damages caused by an owner. They will be asked to pay for the repair, or the condo’s insurance deductible limit, whichever is less.

  
 
Issues caused by exceeding capacity limits
Some corporations have bylaws that limit maximum number of occupants per condo unit. Owners can be charged reasonable amounts for any repair costs or extra utility expenses incurred due to ignoring this bylaw.

  
 
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.

A condo corporation’s declaration may include an indemnification provision as well. This provision requires owners to 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 don’t have a financial impact on other owners. For example, if an owner causes a flood that damages a few units and common elements, that owner will be required to cover the costs of the condo’s insurance deductible, rather than the condo passing that cost on to all owners. These types of provisions often specify that costs will be charged back through the owner’s common expense fees.

In British Columbia, a strata corporation must either have a bylaw that permits chargebacks for repair costs and insurance deductibles, or it can use  s. 133 of the Strata Property Act. According to this section, a strata corporation may do “what is reasonably necessary to remedy a contravention of the bylaws,” including doing work on or to a strata lot, the common property, or common assets.

Stratas can pass “reasonable costs of remedying the contravention” on to owners.  That may include reasonable legal costs.

  

Why not fine an owner?

Issuing a fine is arguably easier than charging costs back to owners. As such, some provinces do fine condo owners.

In Alberta, condominiums can create bylaws which allow them to impose fines against owners who contravene bylaws. The maximum monetary sanction that may be imposed for the first offence is $500. That amount can be increased to $1,000 for subsequent offences.


Note that Alberta condominiums cannot impose fines for violations of board policies or rules.
 
Similarly, stratas in BC can fine an owner or tenant if a bylaw or a rule is contravened.
 
But, in Ontario, the Condominium Act does not specifically authorize condo corporations to fine owners for bylaw or rule violations. Without this authorization, condominiums would find it very difficult to successfully enforce fines. Instead, they rely on other methods, such as chargebacks and mediation, to resolve issues. 

  

Steps for issuing chargebacks

Condos and stratas cannot issue chargebacks randomly. They must follow a process that is fair and objective. Otherwise, the people being asked to cover costs may not have to pay if a judge determines that the corporation didn’t take adequate steps.  

 
In Ontario:  

• Condos must communicate often and proactively with owners who are at risk of incurring costs. Informing owners early allows them to resolve issues before they escalate. The condo may contact them via using physical letters or email.

The letter or notice must:

1. identify the specific issue
2. identify the specific provisions of the Condominium Act or the condo’s governing documents that have been violated
3. give the owner reasonable options to resolve the issue

• If your governing documents outline a specific timeframe for resolving such an issue, this should be included in the notice. If governing documents do not specify a time limit, give the owner a reasonable amount of time to resolve the issue.
• Clearly state what will happen next if the problem is not remedied. It is a common practice to issue three written requests. After that, the condo should prepare to take legal action.
• Keep track of all communications sent to and delivered by the owner.
• Condo corporations should always consider collaborative solutions first. There are situations where the owner won’t negotiate and court will be the only option. But it is important for the corporation to make a reasonable efforts to resolve an issue amicably if possible.

 

Processes are more stringent for stratas:

• A corporation cannot impose a fine against a resident or require them to pay the costs of remedying a contravention unless the strata has:

1. received a complaint about the contravention
2. given the resident the particulars of the complaint, in writing, and a reasonable opportunity to answer the complaint, including a hearing if requested by the resident
3. if the person is a tenant, given notice of the complaint to the person’s landlord and to the owner

• The strata must, as soon as feasible, give notice in writing of a decision on a matter to the person (and landlord/owner, if applicable).
• Once a strata has complied with this process in respect of a contravention of a bylaw or rule, it may impose a fine or other penalty for a continuing contravention of that bylaw or rule.

 
What if the chargeback notice is ignored?

If an issue is becoming complex or contentious, it’s always best to get the corporation’s lawyer involved.

Additionally, Ontario condo corporations automatically have a lien against a condo unit whose owner refuses to pay costs charged to them. The lien will cover the unpaid amount owing, as well as all interest, and all reasonable legal costs and expenses incurred by the corporation.

 
 
Conclusion

Chargebacks are often used in cases where corporations cannot issue fines. Condos and stratas recover costs or repairs or legal matters directly from a resident instead of using the corporation’s funds.

Chargebacks must be issued responsibly, and corporations should always try to work with owners to resolve problems before issuing costs to them. Finding an amicable solution is generally cheaper and less time consuming for everyone.