Condo Special Assessments in Ontario: Can the Board Charge Without a Vote?

A notice arrives saying your condo corporation is charging a special assessment. You never voted on it, and the amount may be large. It is natural to ask whether the board can really do this and whether you have to pay.

This article explains how special assessments work in Ontario, how they relate to the reserve fund, and what can happen if an assessment goes unpaid. It also covers what buyers should know. Details vary with each corporation's declaration and by-laws, so treat this as a general guide.

Can the board levy a special assessment without an owner vote?

Generally, yes. A condo board can levy a special assessment through common expense fees without owner approval. The reasons can include unforeseen expenses, a major repair that exceeds its budget, and litigation costs.

A special assessment is an ownership cost separate from your regular monthly fees. It is also different from a chargeback, which is a cost the corporation bills to one owner, usually because of that owner's act or omission.

How your share is worked out

Each owner's share of common expenses is a percentage set in the declaration, and it may vary with unit size. Your share of a special assessment uses that same percentage, and owners must pay it.

Your declaration is the place to confirm your percentage. Ontario condos are governed in this order: the Condo Act, then the declaration, then the by-laws, then the rules, and if they conflict the Act takes priority.

Where the reserve fund fits in

The reserve fund may be used only for major repair and replacement of the common elements and assets of the corporation. Owners pay into it through their monthly fees, and the board decides how much goes to the fund and may need to raise contributions to keep it adequate.

Boards must also follow study and planning rules. After the first study, the corporation must do updated reserve fund studies at least every three years, alternating between Class 2 and Class 3. The board must review a study within 120 days of receiving it and propose a funding plan that makes the fund adequate by the fiscal year after the study is completed. Owners get a notice of the plan within 15 days of its being proposed, and the board must implement it 30 days from the date it sent the plan to owners and the auditor.

If a fund falls short, or a cost is not something the fund can cover, owners may see a special assessment. Whether that is the reason in your case is a question to put to the board.

What happens if you don't pay

An unpaid special assessment gives the corporation a lien against the unit. The lien covers the unpaid amount, interest, and reasonable legal costs and expenses. The usual steps are:

• Notice of Lien: the corporation gives you this before registering a lien, and if the arrears are not paid within 10 days it can register a Certificate of Lien.
• Registration: the lien expires three months after the default unless the corporation registers a Certificate of Lien, and if it expires the corporation loses its priority over other parties with an interest in the unit.
• Notice of Sale Under Lien: starting 15 days after the certificate is registered, it can issue this notice, which sets a redemption date 45 days after it is issued.
• Court and sale: if you do not pay by the redemption date, the corporation can sue for possession in the Ontario Superior Court of Justice, and after judgment can sell the unit.

You can pay everything the lien secures at any point until the unit is sold, and the corporation must then discharge the lien. If the owner does not pay by the redemption date, the corporation can sue for possession in the Ontario Superior Court of Justice, and after judgment it can sell the unit, recover the lien amounts from the proceeds, and pay any remaining balance to the former owner within 90 days of the sale.

If you want to dispute a lien, the forum depends on the issue. Liens tied to matters within the Condominium Authority Tribunal's jurisdiction can be disputed there, but liens tied to issues outside it, such as repairs, must go to the Superior Court of Justice.

If you are buying: the status certificate

A status certificate must be provided within 10 days. It may include a statement on the most recent reserve fund study and the state of the fund, any arrears on the unit, and special assessments levied since the current budget and why. Whatever it includes or leaves out binds the corporation.

In a court decision the Condominium Authority of Ontario describes, a buyer was exempt from their share of a special assessment because the status certificate had not clearly disclosed that assessments might be levied. Each case turns on its own facts, so do not assume the same result.

What to do next

• Read the notice for the amount, the reason, and the due date.
• Check your percentage in the declaration.
• Ask the board for the reserve fund study and funding plan if the reason is unclear.
• Pay or arrange payment before a lien process starts.
• Keep every notice you receive, especially any Notice of Lien.
• If you are buying, read the status certificate closely.
• Speak to a lawyer if you want to dispute the assessment or a lien, since your declaration and by-laws matter.

Frequently asked questions