Non-Payment of Contributions

Powers, Limitations, and Enforcement Options for Non-Payment of Contributions

What Are Condominium Contributions?

Condominium corporations rely on mandatory payments from unit owners to cover:

• Operating expenses (e.g., maintenance, utilities, management fees)

• Reserve fund contributions (for major repairs and replacements)

• Special levies (also known as special assessments) often for unforeseen or large-scale expenses

Contributions are typically calculated based on unit factors assigned in the condominium plan. The corporation's bylaws may allow contributions to be calculated in other ways as well.

Legal Powers of Condominium Corporations to Enforce Payment

Under the Condominium Property Act (CPA), condominium corporations have strong enforcement rights, including:

• The ability to register a caveat (sometimes incorrectly called a lien) on a unit if contributions remain unpaid

• The power to charge interest and penalties on overdue amounts (as permitted in the bylaws)

• The right to pursue legal action or force the sale of a unit to recover unpaid contributions

Requirements for Enforcement

• Proper Notice Required: Corporations must give owners written notice of arrears before taking enforcement action.

• Procedural Compliance: The CPA sets out specific steps to ensure caveats are valid and enforceable.

• Bylaw Compliance: Some enforcement options depend on the wording of the condominium’s bylaws.

Alberta’s 2-Year Limitation Period

• Condominium corporations must act within 2 years from when the unpaid amount was first due.

• If legal action is not started within this period, the corporation may lose the right to enforce collection.

• The limitation period does not apply to registered caveats—if a caveat is properly registered, it remains in effect until paid; however, the corporation does lose the right to enforce collection.

Enforcement Options Available

1. Late Payment Penalties & Interest – Corporations may charge late fees, as allowed by their bylaws.

2. Demand Letters & Collection Notices – Formal notices requesting payment.

3. Registering a Caveat – If payments remain outstanding, a corporation has a charge against the unit.

4. Legal Action – If necessary, the corporation may apply to court to sell the unit and recover the debt.

Collection Procedures for Unpaid Contributions

Step-by-Step Collection Process:

The collection process follows these progressive steps:

1. Send a Written Notice – Inform the unit owner of overdue contributions, penalties, and payment deadlines.

2. Apply Late Fees & Interest – If allowed by the condominium’s bylaws, late fees and interest may be added.

3. Issue a Final Demand Letter – A last warning before further action is taken.

4. Register a Caveat Against the Unit – If contributions remain unpaid, the corporation may register a caveat against the property.

5. Notify the Mortgage Lender (if applicable) – Some lenders may pay the outstanding contributions to protect their financial interest in the unit.

6. Legal Action (Before the 2-Year Deadline) – If no payment is made, the corporation must file a claim within 2 years or risk losing enforcement rights.

7. Enforce the Caveat (Foreclosure or Sale) – If the debt remains unpaid, the corporation can apply to sell the unit to recover amounts owing.

   
   

Notice Requirements for Caveat

Before a caveat is enforceable, the condominium corporation must:

1. Provide written notice to the unit owner

2. Clearly state the amount due and deadline for payment

3. Follow all procedural requirements under the CPA

Third-Party Collection Agencies

Condominium corporations may hire licensed collection agencies to pursue unpaid fees, but they must comply with Alberta’s debt collection laws.

Judicial Sale Process

If contributions remain unpaid despite all prior actions, the corporation may:

• Apply to the Court of King’s Bench of Alberta for an order to sell the unit

• Use the sale proceeds to cover outstanding contributions, penalties, legal fees, and interest

• Return any remaining balance to the unit owner

Assessing Compliance with Legal Procedures

Reviewing the Corporation’s Collection Process

A condominium manager should verify that the board is following the CPA’s legal process by checking:

• Has proper notice been given? (Required before registering a caveat)

• Was the caveat registered correctly? (Errors may make the caveat unenforceable)

• Are interest and penalty charges lawful? (They must comply with the bylaws)

• Is the board acting in good faith? (Unfair or excessive penalties may be challenged)

• Is the board acting within the 2-year limitation period?

Determining Caveat Validity

A valid caveat must:

• Be registered on the title of the unit

• Clearly state the amount due

• Comply with CPA procedural requirements

  
  

If a corporation fails to follow the correct process, it may lose the right to enforce the caveat.

Risks of Non-Compliance

If a condominium corporation does not follow CPA requirements, it may:

❌ Lose its ability to enforce payment

❌ Face legal challenges from owners

❌ Be required to remove an improperly registered caveat

Best Practices for Condominium Managers

• Advise boards to follow due process and ensure proper documentation.

• Maintain clear records of all communication and collection efforts.

• Consult legal professionals before taking enforcement actions.

• Ensure legal action is filed within the 2-year limitation period.

Legislative Reference

The Condominium Property Act provides the legal foundation for enforcing unpaid contributions.

According to the CPA:

A corporation has a charge against an owner’s unit equal to any unpaid contributions and interest owing, and this charge has priority over other registered encumbrances except for municipal taxes.

Additionally, Alberta’s Limitations Act states that legal action must be initiated within 2 years from when the unpaid amount was first due.