Part 38 published on 01/05/12
“Test Case.” Alberta Master sets out general principles respecting the collection rights of Alberta condominium corporations
Several condominium corporations commenced actions against unit owners to collect amounts owed by the unit owners. The Master undertook a general analysis of the collection rights of condominium corporations, and listed the following principles:
1. Firstly, if the claim is for a typical assessment, or overdue interest on such assessment, then the claim is protected by the statutory charges under section 39 and section 41 of the (Condominium Property Act). There is no need for any review of the bylaws in this regard, other than to confirm the interest rate chargeable on overdue assessments. That interest rate is capped by regulation, and the current cap is 18% per annum.
2. If the claim is for other expenses, incurred with respect to a particular unit (‘expenses’ does not include uncollected revenue such as fines or rents) then the bylaws of the corporation have to be examined to determine if they allow these expenses to be included as part of the assessment against that particular unit. If the bylaws are clear in this regard then these individual assessed expenses, and overdue interest on them, are covered by the Statutory charges under section 39 and 41 of the Act.
[Editorial Note: The decision also says that such expenses could include collection expenses.]
3. Claims which do not fall under item 1 or item 2 may be subject to a contractual charge pursuant to the bylaws of the corporation. For example, some bylaws I have examined grant a charge against units to secure all amounts owed by that unit owner to the corporation. If adequately worded, this contractual charge would cover things such as collection expenses not brought under item 2, unpaid fines, unpaid rents, etc.
[Editorial Note: The importance of the distinction between items 1, 2 and 3 is that statutory charges enjoy a “super priority” – ie. they rank in front of prior registered mortgages.]
4. Any claims which do not fall under items 1, 2, or 3 are unsecured.
The Master then applied these principles to the various actions.