Legal

February 10, 2026 Published by Newfoundland and Labrador Chapter - By Geoffrey Penney

Collecting Condo Fees – Is your Corporation Owed Money?

From the CCI Newfoundland and Labrador Winter 2026 Condo Chronicle Newsletter

It should not be a surprise to anyone that running a condominium is an expensive venture. Insurance, maintenance and repair, reserve fund contributions, professional services, garbage collection, snow clearing - the list of costs goes on. However, these expenses and others are required for the effective operation of any condominium community. In the vast majority of cases, the only source of funds to address day-to-day costs are the monthly common element contributions collected from unit owners. The corporation counts on the contribution of each owner. Without this income stream, the condominium would soon find itself in dire circumstances and unable to meet its duties and obligations.

However, what happens when a unit owner fails or refuses to pay their common expense contribution? Does a corporation have a legal duty to respond and act in such circumstances? What options are available to collect arrears?

How are Fees Determined?

Each year, a condominium corporation must develop a budget for the next fiscal year. The corporation projects its anticipated operating costs for the year including all expenses and required contributions. The annual operating budget is then divided and assessed to each unit in the manner set out in the Declaration (i.e. equal shares, allocation based upon square footage of the unit or use of the common elements).

Each unit owner is then required to pay their share of the common expenses monthly so that the corporation can effectively fund its operations and stay on budget. These funds are deposited into the common expenses fund.

Impact of Common Expense Arrears

The Condominium Act, 2009 (the “Act”) requires that each unit owner pay their assessed share of the common expenses. To maintain the balance between expenses and available funds, all unit owners must comply. Failure to do so upsets that balance and impacts the community by putting financial stress on the corporation and compromising its ability to meet its financial obligations. An owner’s refusal or failure to pay results in his neighbors and fellow owners subsidizing his share of the common expenses. This is manifestly unfair and if permitted to continue unchecked can result in serious issues for the corporation. The longer arrears go unaddressed, the more difficult it is for all concerned when action is finally taken. For a unit owner, a monthly condo fee payment is a financial obligation just like a mortgage payment or a car payment. Failure to pay constitutes a breach of the Act, Declaration and Bylaws and has consequences.

Corporation’s Duty and Obligations

The Act states that the objects of the corporation are to manage the property and assets of the corporation. The corporation also has the duty to control, manage and administer the assets of the corporation. Besides the condominium building(s) itself, the corporation’s greatest asset is its common expenses fund. In addition, the Act requires that the corporation take all reasonable steps to ensure that the owners comply with the Act, declaration, and bylaws. Directors should take heed as the Board is responsible for managing the affairs of the corporation.

Failure by the corporation to take reasonable steps to collect arrears in common element contributions is a failure to enforce compliance with the provisions of the Act and declaration. In such a case, the Corporation is not fulfilling its statutory duties and objectives under the Act.

Certainly, in some circumstances a corporation might allow some latitude for an owner that may be late meeting their payment. However, failure to take appropriate measures where multiple months of arrears have accumulated is a serious problem that a corporation must address.

Options for Collection

Section 51 of the Act states that where an owner fails to pay the share of common expenses imposed upon him by the Declaration, the unpaid amount constitutes a lien on the owner’s interest. The lien includes not only the arrears in contributions, but also interest, costs and legal costs incurred by the corporation through the collection process.

There are several options available to a corporation to address arrears in common expense contributions.

• Demand letters – Sometimes a strongly worded letter from the corporation or its legal counsel which sets out the amount owing, the additional claim for collection costs and the corporations further rights to enforce compliance is enough to convince the owner to pay the arrears.
• Formal Statement of Lien – Filing a Statement of Lien in the Registry of Deeds creates an actual encumbrance over the unit. The condominium lien has priority over all other liens, charges and mortgages (other than a lien for taxes). The registered lien also covers interest and legal fees incurred by the corporation. As it has priority over mortgages, the Act allows a mortgagee (a financial institution) to pay the amount of the lien and costs to the corporation to regain its priority status. The amount so paid by the mortgagee can then be added to the unit owner’s mortgage. In exchange for payment of the lien amount, the corporation then provides a lien discharge. While there is no obligation on a mortgagee to cooperate in this manner, in our professional experience mortgagee’s have responded favorably. In a situation where there is no mortgage on a unit, the encumbrance created by the lien prevents the owner from selling or refinancing the unit.
• Sale of the Unit – When a Statement of Lien is registered it may be enforced by way of power of sale proceedings pursuant to the Conveyancing Act. This means that the corporation can recover the arrears and costs from the proceeds of the sale of the unit by public auction.
• Court Action – Court action is available to a corporation to recover arrears and costs bit this process is likely only appropriate in the most extreme of circumstances.

Tips and Best Practices

The following practices are suggested for corporations when dealing with arrears in common element expenses:

1. The days of post-dated cheques may be long gone, however for reasons of efficiency corporations should require that all owners set up a direct debit process for payment of monthly contributions.
2. Boards should closely monitor monthly payments to ensure all contributions are received on time. In the case of professionally managed corporations, property managers should be asked to immediately advise the board of directors of any issues with receipt of payments. Arrears can accumulate and get out of control quickly if accounts are not monitored.
3. Corporations should consider adopting a policy whereby notices of unpaid contributions are sent to owners after one payment is missed. Should a contribution not be made for three consecutive months, the matter should be automatically escalated to formal collection proceedings (demand letter or lien) with the corporation’s legal counsel.
4. Corporations should save and maintain all written communications with owners with respect to that owner’s arrears in common element contributions. This paper trail can be important to the collection process.
5. Boards should routinely advise owners of the corporation’s policy for collection of arrears and the possible actions that the corporation may take to enforce compliance.

Disclaimer: This article and the views expressed herein are for information purposes only and are not intended, nor should they be considered to be legal advice. Corporations are encouraged to discuss individual cases with their legal counsel for specific advice.

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Geoffrey Penney is a condominium lawyer with Cox & Palmer. He is past President and Chair of CCI National and past President of CCI-NL Chapter. He holds the designations of Associate of the Canadian Condominium Institute (ACCI) and Leader of the Canadian Condominium Institute (LCCI).