Toronto condo owners shocked by a ‘special’ $70K fee to fix parking garage—even owners without parking got the bill. Here’s what happens if they refuse to pay

What are ‘special assessment’ fees?

Are one-off bills of this size even legal? The short answer is yes.

According to the Condominium Authority of Ontario, a special assessment is a one-time fee that condo owners pay in addition to regular fees to address budget shortfalls by unexpected events, like a dangerous parking garage leak.

It is worth noting the rarity of these fees. As a condo investor, you may never have to incur one. But in the scenario that extra funds are needed, a special assessment provides crucial financial reinforcement when other options run dry.

Typically, reserve funds are sufficient to pay for repairs and other unforeseen costs, but if costs exceed what is held on hand, the special assessment fee, subsidized by condo owners, can secure the critical funding necessary to rectify the gap.

Another option is to take out a loan, although this has downsides, like accruing interest and getting into debt, potentially negatively affecting the fiscal health of the community’s stakeholders. Additionally, under-budgeting and litigation are other reasons special assessment fees are occasionally needed.

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What if you don’t pay your special assessment?

Condo unit owners are legally obligated to pay special assessment fees, if needed. Refusal to pay them may result in fines and other legal problems, although condo boards are required to provide clear information on why the fee is required.

Lastly, special assessment charges vary significantly, depending on a multitude of factors. According to Insight Law Professional Corporation, they can range anywhere from a few hundred bucks to tens of thousands.

In the case of Wilson Avenue, the board members emphasized the need to prioritize the building’s safety over the owners’ frustrations, stating it is their “primary duty to keep the property safe.”

However, the board did extend an olive branch to owners by postponing the vote on the matter to allow time to assess different options for the repair, including the possibility of taking out a $7-million loan.

Adam Lipowitz, a condo owner in the building, rejoiced at this news, telling CTV: “What we are hoping for is a little more transparency, a little more time, and a little more options.”

However, if the board does vote to charge the fee, owners will be on the hook. If they don’t pay, condo associations may put a lien on an individual unit. In other words, the condo can legally seize the property if the fee is not paid, and, if need be, even sell the unit.

To minimize your chances of ending up in this kind of nightmare scenario, you can try to choose a condo that flaunts sound financial health. Luckily, the Ontario Condominium Act grants you the ability to investigate the fiscal health of the condo you aim to invest in. You can do this by requesting the status certificate, which will give you information like a copy of the annual budget, audited financial statements, and information about the reserve fund.

For best results, it is worthwhile to consult a lawyer who specializes in real estate to ensure your hard-earned money is safeguarded.

Sources

1. CTV News: Pat Foran: Condo owners stunned by $70K special assessment (October 3, 2024)

2. Condo Authority Ontario: Special Assessments

3. Insight Law Professional Corporation: Condo Special Assessments: Definition & How It Works (August 11, 2024)

4. Ontario Condominium Act: Condominium law changes