Costs to Collect Strata Fees Now Fully Recoverable!
The last day of October brought good news to strata corporations. Three judges of the British Columbia Court of Appeal concurred and ruled that strata corporations are entitled to reasonable costs associated with the collection of delinquent strata fees.
This decision overturns the current status quo where courts allowed only schedule B costs. Schedule B costs are prescribed by the Supreme Court Civil Rules, the application of which lead to greatly reduced legal fees and costs being recouped from the defaulting owner, leaving the strata corporation to foot the bill for the remainder of the fees and costs; which could under certain circumstances be substantial.
This risk of costs lead strata councils to be wary of instituting action against defaulting owners for delinquent strata fees, in the hope that the defaulting owner would pay-up at some stage. This of course had the ripple effect of causing budgetary shortfalls, which affected strata corporations’ liquidity.
However, in The Owners, Strata Plan KAS2428 v. Baetting, 2017 BCCA 377, the Honourable Mr. Justice Fitch stated that actual legal costs incurred in registering and enforcing a lien, and reasonable disbursements, were recoverable from the delinquent owner; provided such costs were reasonable.
This long overdue change in the manner in which collection costs can be recovered now allows strata corporations to recover legal costs spent on collection delinquent strata fees on a full indemnity basis. As long as the legal costs are reasonable, the strata corporation should recover all their legal fees.
Strata councils are now free to adhere to their statutory duty to enforce payment of strata fees pursuant to the Strata Property Act and Strata Bylaws without running the risk of running up legal costs for the strata corporation.