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September 12, 2013

Durham Condominium Corp. No. 56 v. Stryk: Chargebacks and Refusing Payments

The court in Stryk upheld the practice by condominium corporations of collecting chargebacks from unit owners by applying monthly pre-authorized payments or monthly common expense cheques to the outstanding chargebacks, rather than applying the payments to the unit owner’s monthly common expense contributions. The unit owner’s monthly contributions are then considered to be in arrears, even though the unit owner is often under the impression that he or she has already paid his or her common expenses. The newly outstanding common expense arrears can then be secured by a lien. While this practice is legal in the right circumstances, condominium corporations should always obtain appropriate legal advice before proceeding in this manner.

On a separate issue, the court in Stryk also held that a condominium corporation does not have the right to refuse common expense payments when tendered by the owner, merely because there is a lien registered on title to the condominium unit. We recommend that condominium corporations seek advice when payments are being tendered to make sure that the condominium corporation preserves its legal rights in these circumstances.


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