Failure to Pay Condo Fees – One Toronto Condo Corporation Loses $1.3 million

August 2016

With mortgage rates prepared to start increasing, condo liens may soon become more prevalent within condo corporations.

As mortgage payments increase, more condo owners may struggle with paying their condo fees. It will become increasingly important for condo corporations to handle this process consistently and properly.

When a condo owner of a mortgaged property fails to pay their condo fees, a lien should be registered to protect the condominium corporation’s interest. This prevents unpaid condo fees from becoming uncollectible. The lien protects other condo owners from becoming responsible for paying the costs of ownership on behalf of one who fails to pay their fees.

The financial institution holding the mortgage may choose to make payments to protect their financial interest in the property.

One Toronto condo corporation allowed two directors, owning more than half of the units in a commercial condo building, to control the corporation and not pay required condo fees. The corporation failed to register a lien for outstanding condo fees and was unable to collect $1.3 million in condo fees.

For an understanding of the condo lien process, see When Common Expense Fees are not Paid in the Condo Archives under Financial Management.