At the time of the sale of a condominium unit it occur be that there are unpaid condo fees (the expenses of a condominium) owed by the selling co-owner to the syndicate of co-ownership. Who is responsible for paying these fees? Article 1069 of the Civil code of Quebec establishes the applicable rule on this question. Here’s what it says:
«1069. A person who acquires a fraction of divided co-ownership, by whatever means, including the exercise of a hypothecary right, is bound to pay all common expenses due in respect of that fraction at the time of the acquisition.
A person contemplating the acquisition of such a fraction may request from the syndicate of co-owners a statement of the common expenses due in respect of the fraction and the syndicate is thereupon authorized to provide the statement to him, provided the syndicate gives prior notice to the owner of the fraction or his successors; in such a case, the prospective acquirer is only bound to pay the common expenses if the statement is provided to him by the syndicate within 15 days of the request.
The statement given to the buyer is adjusted to the last annual budget of the co-owners.”
This article renders the purchaser responsible for the payment of the unpaid condo fees owed by the seller at the time of the purchase. However, this same article allows the purchaser, before they become the owner in title owner, to send a request to the syndicate of co-ownership asking it to provide them with a statement of the unpaid fees owed with respect to that unit. In practice, once the purchaser is aware of the amounts unpaid by the seller, they will request that those costs be deducted from the proceeds of the sale by the notary. These are commonly referred to as “adjustments”.
This information request can be sent to the syndicate of co- ownership by the purchaser personally, but in practice it is the notary of the transaction who will do so. Once it receives this request, the syndicate has a 15 day deadline to respond and provide the statement of account, failing which the purchaser cannot be held responsible to pay them. However, the seller remains fully responsible for the payment of the sums due, which in practice will be deducted by the notary from the proceeds from the sale due to the seller and sent to the syndicate of co-ownership.
The syndicate is authorized to provide this statement of account, but it must notify the seller that it will provide the information.. The syndicate isn't required to obtain the seller's authorization beforehand, and the co-owner can't object to the syndicate providing the information.
This article is important because it provides a measure of protection for the syndicate against co-owners who refuse or neglect to pay their contribution to the common expenses as established in the syndicate,s most recent budget, as well as any unpaid special assessments.
But the syndicate should be wary not to let too much time go by before acting to collect because under the law the syndicate is barred from taking legal action against a co-owner for unpaid common fees which are over three years past due.
These rules also apply whenever a co-owner's mortgage creditor takes legal action when the co-owner defaults on their mortgage payments. Usually, because the co-owner can't pay their mortgage, the mortgage creditor acquires the condominium by repossessing it. When this happens the mortgage creditor will have to pay the owner's unpaid condo fees, and is required to pay any future condo fees as they become due for as long as they are the legal owner of the condominium. However, there is an exception to this rule: the mortgage creditor who obtains the forced or voluntary abandonment of the condominium for purposes of having it sold by a bailiff through a court-ordered sale doesn't become its owner, but is deemed to only be in “possession” of the condominium for purposes of its sale. In this case the mortgage creditor will not be obliged to pay the fees owed to the syndicate of co-ownership.
On the other hand, in such circumstances, we recommend to the syndicate to send a written notice to the bailiff in charge of the sale by judicial authority informing him of the amount due to the syndicate. The bailiff will then be held to deduct this amount from the proceeds of the sale and send it to the syndicate. Failing to deduct and to send this amount to the syndicate, the eventual buyer will be held responsible for the payment.
Contrary to what we may be led to think, the publication by the syndicate of a legal hypothec on the condominium unit won't be of any help because of the rule which stipulates that the person who buys the property through a court ordered sale by bailiff acquires it free and clear of any existing contractual or legal hypothecs.