Paying of legal costs is inequitable

Bill 106 will allow the condo corporations and the owners to recover their costs that are granted by:

•	Costs granted by a court, an arbitrator or the Condominium Authority Tribunal.
•	An award of compensation by an arbitrator or the Condominium Authority.
•	an award of damages granted by a court.
•	any actual costs incurred in obtaining a court order.
•	any penalty amount awarded to a unit owner and against a corporation by the Condominium Authority.

The condo corporations have always been able to lien an owner's unit if they were granted an award by the courts. So if the owner didn't pay up—in full— within 30 days of the court judgment on costs, the corporation could lien the unit within 90 days.

What if the corporation didn't pay?
If the corporation lost in court and the owner was not paid within 30 days, that was too bad. Some boards take the loss personal and decide that they will not pay. The owner then had a hard time collecting.

I know of the president of a board who told the owners at an AGM that even though the courts awarded an owner costs, he would not pay. He figured that this would insure that no one would ever again take the corporation to court.

I suppose the owner could put a writ on every unit but that would be expensive and time consuming. The owner could go to court to force payment but that too would be expensive.

Perhaps the owner could sell the debt to a collection agency if the owner could find one that would buy it.

Best bet?
The best way for the owner to get paid is to take the condo corporation back to court on a new application. The corporation will have to pay the outstanding court costs before it would be allowed to defend itself against the new application. This has been done but then the owner and the corporation turn a legal dispute into legal warfare.

What Bill 106 proposes
If Bill 106 passes, the condo corporation can still lien the owner's unit if it wins costs so it gets its money right away. That has not changed.

However, the owner needs to wait 30 days to see if the corporation will pay up and if it decides not to, then the owner can off set the costs award against his common element fees.

Not equitable
For the owners, if the award is for a relatively small amount, this may be a fair way to insure they get their costs. However for large awards, this is definitely not equitable.

Costs award	Monthly fees	Time to collect
$02,000	$350	06 months
$20,000	$350	05 years
$85,000	$480	15 years (actual costs from a recent court case)

The owner has to pay his or her lawyer fees now, not have them spread out over years so waiting for their costs to be paid in monthly installments cannot be considered equitable.

Interest rates?
What is the interest rate that the condo corporation will have to pay on the outstanding balance? Will it be the 18-24% that the condo corporations charge the owners for unpaid balances or an annual rate that is far lower?

No incentive to pay
There is no incentive for the condo corporation to pay the costs award. It can make the owner wait for months or even years to recover their money.

Selling the unit
Most owners who have fought their condo corporation in court don't want to remain in the condo complex. The atmosphere has become too toxic. They need to get out.

If an owner sells, then how does he get the balance of the costs award? After all, cost awards goes to the individual and is not tied to the unit. If he no longer owns the unit, then what happens?

It is not clear if the deductions for the common expenses is transferable to a new owner. (Most likely not.)

If they are, that could really complicate the real estate transaction. The purchaser should ideally pay market value for the unit plus a premium for the outstanding court costs. However, who wants to take on a higher mortgage to pre-pay common element fees? The unit would most likely have to be heavily discounted.

A better way
If the corporation can get its costs by putting a lien the owner's unit if they are awarded court costs then why not legislate that the condo corporation must pay the owner's court costs within 90 days of the costs award. If necessary, the corporation can levy a special assessment.

It would be an equitable, cheap, easy and cost effective way of paying the corporation's debt.


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