Owe Strata or Condominium Fees?
Tips for Catching Up
by Julie Jaggernath
Getting behind on paying your condo or strata fees is a big issue and catching up needs to be one of your top priorities. This isn’t just because strata corporations count on each owner paying their share every month for the maintenance of everyone’s homes; it’s also because getting behind puts you at risk of foreclosure. Whether you live in a townhouse, apartment, or other multi-family property, here are 3 tips to help you catch up on strata payments:
1. Craft an Emergency Budget to Get Out of Strata Debt
Strata fees are a housing bill and fall into the same category as rent and mortgage payments. So falling behind on strata fees is a financial emergency – and calls for an emergency budget. Review your obligations, bills, and expenses to see where you can reduce your costs. To help with this, think about what you want versus what you need. Look to either reduce or eliminate the costs of what you want, which might be an entire bill (e.g. the streaming services you don’t really use) or just a portion of one expense (e.g. a top tier data amount for your cell phone).
Any amount of savings will help towards balancing your budget and giving you what you need to make up your strata or condominium payments. Also list out whom you owe money to and how much. This is an important list and getting it down in black and white will help you prioritize which debts need to be paid first — and if you can afford to pay them or not. If your strata corporation has already contacted a lawyer about your arrears, you’ll need to prioritize this debt if you want to keep living in your home.
Strike a Balance Between Reducing Expenses & Increasing Income
If your emergency budget still isn’t enough to get back on track, consider how you can get help to cover the shortfall. Taking extra shifts at work or even a second job is a great way to earn the money you need. After your strata debt is taken care of, you can consider lowering your working hours again. However, if you’re on EI and/or disability, there are typically restrictions on how much additional income you can earn. Look for ways to balance your cash flow without jeopardizing your sources of support. For instance, could you take in a roommate to make up your budget shortfall? Do you have adult children living at home who could help with paying bills and buying groceries? As hard as it may be, the key to turning your situation around is to reach the point where you’re not spending more than what’s coming in.
2. Make a Strata Payment Plan that Works for You and the Council
A strata corporation wouldn’t be doing its job if it didn’t actively try to collect what’s owed. However, that doesn’t mean the volunteers in charge of its management won’t be sympathetic to your challenges. After all, owners are neighbours, and some may be friends as well. Decide what kind of payment schedule might be reasonable for both you and the council and propose it to them in writing. This can give you the needed breathing room to pay your late strata fees without stretching your emergency budget too thin.
While making a payment plan is a good option, failing to follow through with it will only make things worse. That’s why it’s important to craft a realistic budget before you offer a way to clear up what you owe. Like any other creditor, your strata expects that when you’re unable to make your normal payments and agree to alternate arrangements, you stay true to your word. And like any other creditor, communication when you’re unable to pay is essential. If your strata council only hears silence from you, they’ll be left with no choice but to proceed with legal action.
What Happens If Legal Action Starts Against Your Strata Fee Arrears?
Should your council proceed with legal action, most stratas have a bylaw that allows those costs to be charged back to your account, rather than be shouldered by all of the owners. This means that you could owe as much as $1,000 in legal fees on top of your arrears. However, if your council proceeds with legal action, it’s not all bad news. When a lien is registered against your strata lot it is to protect the strata corporation from a potential loss. That lien also means that the council is in a better position to entertain a reasonable and affordable payment plan from you to catch up. In a perfect world, you will be able to escape having a lien registered against your home, but if it does happen, look over the information from the lawyer to learn more before panic sets in.
Re-Proposing a Strata Fee Payment Plan
If you have reneged on a previous payment arrangement, expect an uphill battle with any new plan you put forth, especially if there is no lien in place. That said, there are steps you can take to strengthen your position. Start by explaining if you’ve freed up cash in your budget that previously wasn’t available. This could be outlining which bills you’ve reduced and what that total comes to on a monthly basis. If you’ve taken in a roommate, that’s extra cash for strata arrears. Share as much as you’re comfortable sharing and provide proof wherever possible.
If you’re not behind with your monthly mortgage payments, you might be able to ask your lender for a hardship deferral. This would allow you to redirect mortgage payment money to catch up on your strata fees. Selling some possessions is another option to raise money for your strata payments. Whatever you choose to do, get proof and use it to show that this payment plan will end differently from the last one. Your goal is to convince the strata council that you have the ability to follow through with what you’ve proposed. Be sure that you can afford whatever you agree to, as it’s unlikely you’ll get another chance.
3. Understand How Strata Arrears May Impact Mortgage Renewal
If your strata corporation begins to pursue legal action to recover the arrears you owe for unpaid strata payments or special levies, you will face some difficult decisions. Your mortgage holder may even have given the strata notice that they want to be notified if you’re in arrears with your strata obligations. This could potentially provide you with some assistance, but it will also make renewing your mortgage that much harder.
After outlining your budget and reviewing your debts, it may come to light that you can’t afford to keep living where you are now. If this is the case, taking action sooner rather than later will help you stay in control of decisions around your living situation. Find a place to rent, see about buying a more affordable home, sell your property yourself, or even consider renting it out if it will generate enough income to pay for itself. In stratas with a rental restriction, there can be options to allow rentals for hardship reasons. Check your bylaws for more details and connect with your council if you need to ask for an exception. Even if you need to make choices you don’t like, having a plan that you control will give you some peace of mind during this tumultuous time.
What to Do If You Need Help with Debts Besides Strata & Condominium Fees
If strata fees are not the only debt you owe, then dealing with those other debts at the same time may free up the needed money to deal with your strata or condo debt. Not sure what the best way to do this is? Our non-profit credit counsellors can help you review your entire situation and find solutions to reach your goals. Furthermore, we can negotiate with creditors on your behalf for unsecured debts such as credit cards and lines of credit. Before you commit to anything, schedule a free and confidential appointment with us by phone at 1-888-527-8999, through email, or online. Our accredited counsellors will be happy to point you in the right direction.