Condominium Fines & Chargebacks
Every so often I have a client ask me if they can fine a unit owner because of behaviour that is annoying (i.e. constantly paying their fees late) or unsavoury (i.e. rude or vulgar language). Unfortunately for condominiums (and fortunately for the offending owners), condominiums in Ontario cannot fine unit owners for their undesirable behaviour. However, there are other charges that may be levied against a unit because of the behaviour of the unit owner or occupant. These are typically referred to as "chargebacks".The Condominium Act, 1998 contains a few provisions that allow a condominium to charge certain costs back to unit owners. The most common are: 1) Section 85(1) authorizes a condominium to register a lien against a unit where an owner defaults in their obligation to contribute toward the common expenses. In such a case, the condominium may add the interest owing and "all reasonable legal costs and reasonable expenses incurred" in collecting the amount. 2) Section 92(4), which authorizes a condominium to charge repair costs back to a unit owner where the repairs were completed on the owner's behalf after he or she failed to complete them within a reasonable time. 3) Section 98(4) authorizes a condominium to add costs, charges and interest and expenses to an owner where the owner fails to comply with an agreement made under that section (these agreements are typically referred to as "section 98", "alteration" or "indemnity" agreements). 4) Section 105(2) authorizes a condominium to charge the lesser of the repair costs or the insurance deductible back to the owner if the owner or related person (i.e. tenant, family) cause damage to the owner's unit. The condominium may also pass a by-law to extend the circumstances in which the lesser of the deductible or repair costs may be charged back to an owner. 5) Section 134(5), which applies to court applications brought by condominiums against unit owners, authorizes condominiums to add any award of damages or costs made against any owner or occupant of the unit and additional actual costs to the unit owner. In addition to the Act, most condominium documents contain provisions that require the owners to indemnify the condominium for certain costs, damages, or losses (typically called an "indemnification clause"). These clauses vary significantly from condominium to condominium. Older condominiums typically have clauses that require indemnification for costs, damages or losses to the common elements or units caused by an act or omission of an owner or occupant of a unit. Newer condominiums, or condominiums with recently amended documents, often have clauses that allow them to recover additional costs, such as legal fees for enforcement matters. The only way to determine the type of clause your condominium documents contain is to carefully review your documents. An interesting legal debate for another day is whether an indemnification clause must be contained within a declaration or if it is permissible to create such a clause in a by-law or in a rule. As with most legal issues, it depends on which lawyer you ask!