Paid our fees, lost our unit

When a condo corporation changes the property management company (PMC), the owners must make sure that their common element fees are continuing to be deducted from their bank accounts. Don't take it for granted that the changeover will go smoothly.

Here is what happened to one couple.

Background
In 2008, MTCC #706 elected a completely new board of directors. The new board replaced the corporation lawyer and replaced Orion Management with Channel Property Management.

Channel lasted only five months because a few owners knew one of Channel's vice-presidents—a past president of this condo—and were adamant that they did not want Channel.

So, within two months of Channel arriving, they gave two months notice and Harris Property Management took over.

It is common practice that the corporation's records are kept at the property management company's office and not with the condo corporation. So whenever a condo corporation changes management companies, the board relies on the integrity of the management company to turnover all the condo's records to the new management company.

Sometimes that happens but it is also common for some records to go missing and even for the corporation's computer in the condo's management office to have had its hard drive reformatted.

Spite is not limited to kids.

It is possible that Channel did not get all of the records from Orion and it is very likely that Harris did not receive all of the corporation's records from Channel.

As result, the corporation's records were in disarray. That caused a lot of grief for the condo corporation and proved devastating for one couple.

The unit owners
The unit owners paid their fees by cheque by dropping them off at the building's management office faithfully every month and had been doing so since 1996.

Condo fees in arrears
On 21 January 2009, without any warning, the unit owners got a Form 14 letter from the condo corporation’s lawyer stating in part:

Further to your request, the following remains outstanding with respect to the condominium lien registered on title to the above-noted unit:

Common Expense Contribution: to and including January 2009 ($526.58 x 5)	$2,632.90
Special Assessment: $105.13 x 5	525.65
Accrued Interest	277.25
Late fees:	125.00
Legal Costs incurred to-date:	738.75
Less: payment received	(1,000.00)
Total Amount Owing	$3,299.55

The above-noted statement is valid until 3:00 p.m. on January 30, 2009.   Should the above-noted sum remain outstanding, we hereby reserve our client's rights to proceed with the collection process, which includes Power of Sale proceedings.

There are a couple of problems with this letter.

First of all, the owners did not get any "friendly reminders" that their cheques for five previous months were not cashed and there was no explanation of what months had not been paid. The owners suspected that it was for the previous five months during which the condo had changed property management companies.

Sure they should have noticed that their condo fees were not coming off of their bank statements as they should have checked their bank balance every month but not everyone does that.

More interesting, the letter stated misleading information as there was no lien registered on title.

The owners made out a bank draft and sent it to the corporation's law office. After paying $1,141.00 in extra costs, the owners were back in good standing.

Another bump in the road
In February 2009, the owner gives Channel the monthly cheques for February's fees and special assessment. She asks for and gets a receipt for the two cheques.

The cheques for the March 2009 fees were cashed on 19 March 2009.

On 31 March 2009, Harris becomes the new management company.

At the start of September 2009, the owner goes to the management office to hand in her cheque for that month's fees. The manager opens her unit's file folder and the two February 2009 cheques were found sitting in the folder. They were never cashed by Channel.

Since they were stale-dated, the owner gave a new replacement cheque to the manager and that cheque was cashed.

Registration of a lien
On 30 April 2009, the corporation law firm registers a lien against the owner's unit.

The owners didn't receive the mailed notice from the corporation's lawyer and had no knowledge of this lien. It appears that the mortgagee, the TD Bank was also not informed.

I understand that the property management company procedures were to automatically forward the files of owners with arrears directly to the corporation lawyer—without consulting the board of directors.

Black October
In October, the owners get a payout statement from the condominium's lawyer.

The following remains outstanding with respect to the condominium lien registered on title to the above-noted unit:

Common Expense Contributions/Special Assessment: to and including October, 2009	$1,901.19
Accrued Interest	$  259.06
Late Fees	$100.00
Legal Costs incurred to-date:	$1,676.65
Total Amount Owing:	$3,936.90

The above-noted statement is valid until 4:00 p.m. on October 30, 2009. Should the above-noted sum remain outstanding, we hereby reserve our client's rights to proceed with the collection process, which includes Power of Sale proceedings.

There is an ongoing stream of e-mails to the corporation's lawyer asking for specifics on exactly what the owners owed and for what months as the owners kept records of their payments. Details were not forthcoming.

The owners took the position that they did not owe any fees so they were not going to pay money they did not owe nor were they going to pay legal fees for the collecting of a non-existing debt unless the corporation could show them that the debt was real.

The problem was with the two management companies. They would receive cheques at the beginning of the month and then would cash them any time from the third of the month to the 30th of the month. Once, a cheque was not cashed until the beginning of the following month.

On 18 February 2010, the owners sent the condo’s lawyer a letter asking for details on what the condo corporation was claiming that they owed. They get the following reply.

After a review of same and other documents, the following remain outstanding with respect to the condominium lien registered on title to the above noted unit:

Common Expense Contribution/Special Assessment & short payments: to and including Mar. 2010	$1,859.83
Accrued interest:	383.67
Late fees:	50.00
Legal Costs incurred to-date:	2,523.21
Total Amount Owing	$4,816.71

The above-noted statement is valid until 4:00 p.m. on March  31, 2010. Should the above-noted statement remain outstanding, we hereby reserve our client's rights to proceed with the collection process, which includes Power of Sale proceedings.

We understand that you provided your payment for your common expense contribution for the month of March at the management office and in consideration for same, the interest calculation is only up to
February 28, 2010.

The owners were frustrated:
The owners wanted the condo's management and lawyer to look at their records and confirm that they owed nothing.

They knew that they were not in arrears and were scared about the lien. They wanted it taken off their unit and they had no knowledge of the April 2009 lien until they received the lawyer's letter six months afterwards.
 
They couldn't afford to pay legal fees to hire their own lawyer and they thought they could deal with the corporation's lawyer and the three different management companies because the facts seemed so undisputable.

In March 2010, the owners got a breakdown of what was owing:

Common Expenses:

March 2010	585.11
March 2009	637.31
February 2009	637.31
Short payments	11.30
Total common expense contributions outstanding	$1859.83

Legal fees and disbursements:

Form 14- Notice of Lien to Owner(s)	$345.00
Registration of lien (inclusive of registration of a Discharge)	937.90
Payout statement—October 2009	393.75
Payout statement February 2010	393.75
To review of file/documents & account update	452.81
Total legals and disbursements outstanding	$2,523.21

The property management company returned their March 2010 cheque and the owners were instructed to send their monthly fees to the corporation's lawyer under trust.

More management turmoil
In the summer of 2010, three new directors are elected to the board.

In September 2010, the board terminated Harris Management's contract and they gave Harris only 30 days payment in lieu of notice instead of the 60 days that the management contract stipulated.

In return, Harris kept the corporation's records and took the condominium corporation to small claims court to recover their missing fees.

The two sides came to a settlement and the condo corporation received its records; or at least most of them.

Thus Orion Management returned to MTCC #706.

The owners and Orion Management
In October 2010, the owners were told by the condo's law office they could resume paying their monthly fees to the management company starting in October 2010.

In mid-February 2011, Orion sends the owners a letter stating that the lien was still in place and that the owners are in arrears.

The owners asked Orion what months do they think the fees are missing.

Orion gets back in mid-July 2011 saying that the lawyer claims that the monthly fees for February, March and September 2009 were in arrears.

The owners send Orion copies of the cashed cheques for those months proving that they were paid and Orion keeps on cashing their monthly cheques. This continues until June 2012.

So far, this dispute had gone on for three years with three management companies and three transfers of the corporation's records.


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