Garnishing Tenants’ Rent & Power Of Sale

When non-resident owners do not pay their fees, even after a lien has been registered, their tenants’ rental fees may be garnished by the condo corporation. However, this is an option that is rarely taken.

A letter has to be sent both to tenants and owners stating how much tenants have to pay the condo each month and how much (what is left) goes to the landlord. Tenants lose nothing in this situation but it is a nuisance and it may worry them. This letter is called a Notice of Attornment. If legal fees are involved, they are added to the total owed to the condo.

Tenants who refuse to participate can eventually be evicted after proper procedures have been followed. (The condo lawyer should be consulted.)

Let’s return to our fictive owners, the Tomtoms from above. After a lien has been registered and a reasonable period has passed, the Tomtoms still have not paid what is owed the condo. As they do not have tenants, the next step is to obtain a power of sale.

Power of Sale

A power of sale is obtained by the condo lawyer and served to the owner and mortgage provider, such as a bank. (At that point, the bank may decide to settle the issue and pay up.)

Once the power of sale is served to owners, they often rush to the office with all manners of excuses, good and bad! Unfortunately, condos have by then incurred financial losses and managers cannot accept excuses in lieu of payment!

When owners realize that managers are serious, they usually settle the entire amount by certified cheque. But, at that point, they have unfortunately accumulated interest and additional legal fees.

No one likes to reach the point where a unit has to be sold by the corporation. It is a painful procedure for owners and it represents a lot of work for management and board. This is a legal procedure that has to be followed carefully and involves, among others, obtaining estimates from three real estate agents as to how much the unit is worth on the current real estate market. The suite just can’t “be given away as a good deal” for the sake of expediency. Lawyers should be involved.

At that point, or before, a bank may repossess the unit and deal with the owners. However, the condo corporation has priority and most arrears, interests, and legal disbursements incurred have to be paid to the condo first, with a few exceptions, such as property taxes.

If the defaulting unit is sold, the condo is compensated for everything. The remainder of the sale proceeds is returned to the defaulting owner and other creditors, if any. In other words, a condo does not make any money out of this sale. It just gets back what it is owed.