Condo Chargebacks in Ontario: When You Must Pay for Damage

Getting a bill from your condo corporation for repairs can be a shock, especially if you think the damage was not your fault. Chargebacks are a recognized part of condo ownership, but they have limits and they depend partly on your building's own documents.

This article explains what a chargeback is, when the corporation can bill you for damage, how the insurance deductible fits in, and what can happen if the amount goes unpaid.

What a chargeback is

Chargebacks and special assessments are ownership costs separate from regular monthly fees. A chargeback is a cost the corporation bills to one owner, usually because of that owner's act or omission.

This is different from ordinary common expenses, which pay for maintaining the common elements, reserve fund contributions, and services such as cleaning, building maintenance and condo management.

Damage caused by an owner, tenant or resident

When damage is caused by an owner, tenant or resident, s. 105(2) lets the corporation charge the owner the lesser of the repair cost or the corporation's insurance deductible.

Some corporations go further. Some have by-laws that make owners pay the corporation's deductible in more situations, including where no one is directly at fault. Deductibles can range from a few hundred dollars to tens of thousands. Check your by-laws to see whether yours has this kind of provision.

Who repairs what, and insurance

The corporation repairs damage to the standard unit as defined in its governing documents. Owners must repair everything outside that definition, however the damage was caused. The corporation's property insurance does not cover improvements or non-standard elements of units, and fixtures, furnishings, equipment and personal property are generally not part of a standard unit.

Owners are not required by any statute cited to carry their own insurance, but owners should strongly consider it, including property insurance for upgrades, fixtures, furnishings, equipment and personal property. Owners exposed to deductible by-laws may need coverage often called deductible or loss assessment coverage. Your declaration, by-laws or rules may also make insurance mandatory for your building.

• Standard unit repairs: the corporation, as defined in its documents.
• Upgrades, fixtures and personal property: generally the owner.
• Deductible: possibly the owner, under s. 105(2) or a by-law.

If a chargeback goes unpaid

If an owner cannot pay chargebacks added to their condo fees and no solution is reached, the corporation automatically has a lien against the unit for that debt.

The process has steps. The corporation gives a Notice of Lien, and if the arrears are not paid within 10 days it can register a Certificate of Lien. Unless it registers one, the lien expires three months after the default. You can pay everything secured by the lien at any point until the unit is sold, and the corporation must then discharge the lien.

If you dispute a lien tied to an issue within the Condominium Authority Tribunal's jurisdiction, such as nuisance, parking, storage or pets, you can dispute it there. Liens tied to issues outside that jurisdiction, such as repairs, must go to the Superior Court of Justice.

What to do next

• Ask the corporation for the invoice and an explanation of the charge.
• Read your declaration and by-laws for the standard unit definition and any deductible provision.
• Check whether the amount is more than the lesser of repair cost or deductible.
• Contact your own insurer promptly.
• Do not ignore a Notice of Lien; get legal advice about your options.

Frequently asked questions