Raising Condominium Fees

Note: The rules and law may have changed since this article was first published. It is provided for archival purposes but you should consult with your lawyer for the current state of the law

Collecting condominium fees is crucial to the existence and continued life of the condominium corporation. It is important to ensure that enough fees are being collected to cover the daily maintenance of the building and property and that there are sufficient fees being contributed to the reserve fund.

Pursuant to The Condominium Property Act, 1993 the Board of Directors of the condominium corporation is responsible to exercise the powers and perform the duties of the corporation. This includes management and administration of the corporation, including collecting fees, paying expenses and keeping proper financial records. In order to perform these duties the board is entitled to determine the amount of condominium fees required to cover all expenses and to levy the fees necessary, without the approval of the unit owners. It is important to remember that despite the broad power given to the Board of Directors, directors are accountable for their actions and must ensure that they are acting in the best interests of the condominium corporation as a whole and not in pursuit of their own personal interests.

The Condominium Property Act, 1993 provides that the corporation shall levy on the owners of the units condominium fees consisting of two parts; common expense fund contributions and reserve fund contributions. In order to determine the amount of fees required for the common expense fund, the Board of Directors should look at the past year’s financial statements and the budget for the upcoming year to assess how much money the condominium association requires to meet the expected expenses. To determine the amount that should be collected for the reserve fund the Board of Directors should use the reserve fund study as a guide when reasonably assessing what amounts need to be collected.

Once it is determined what amount of fees is required, the Act and The Condominium Property Regulations, 2001 set out how the contributions are to be levied. Specifically, the Regulations set out the prescribed procedure for allocating amounts. The legislation states that the board must allocate the amounts required for the common expenses fund and reserve fund among the unit owners in proportion to the unit factors for their units. The funds can be allocated among the owners by a different scheme of apportionment only if 75% of all owners approve a bylaw to allocate the funds by a different scheme. This can be any scheme as long as it is approved by 75% of all the owners. If a different scheme of apportionment is approved the Act and the regulations provide further steps that must be taken to implement the scheme.

Once the Board of Directors determine and levy the fees they must pass a resolution outlining what the fees will be and the terms of payment. The Act provides that a fee levied in accordance with the Act is due and payable on the terms outlined in a resolution of the corporation once such resolution is passed. Common sense dictates that the owners should be given some notice of the fee increase and a reasonable time to pay same. (e.g. at least one month’s notice should be given when fee’s are going to be increased, or a month be allowed to pay a special expenses levy.) However, as outlined above it is the Board of Directors who set the terms and conditions of the payment of the fees and therefore it is in their discretion. Re-iterating what I have said above, the Board of Directors must act in the best interests of the condominium corporation.