What Happens If Multiple Owners Stop Paying Their Condo Fees?
Practical Guidance for Smarter Condominium Governance in the Sarnia and London Areas
This is a common question among condo board members—especially during uncertain financial times. At Sapphire Condominium Management, we’ve managed millions in receivables across Sarnia and London, successfully resolving hundreds of arrears cases. Our average recovery rate exceeds 98%—often without needing legal escalation. We monitor delinquencies closely and take action early to protect cash flow while preserving owner relationships.
While it’s a valid concern, the reality is that Ontario’s condo system has strong safeguards in place to protect both the corporation’s financial health and the interests of the other owners.
Step One: Understanding Cash Flow Impact
An important piece to understand here is the difference between Revenue/Income or Cash coming in, because those are two separate items. Revenue/Income comes from common fees and is shown on your Income and Expense statement or Profit and Loss statement, and is accrued regardless of whether the owner paid or not.
For example, let’s say your condo charges $300 per month for common fees, and 1/35 condo units end up not paying their monthly charges. This would mean your revenue would show a total of $10,500.00 (35 x $300), but because of one non-payment, you would only see $10,200.00 come into the bank account. Then it’s recorded in your Accounts Receivable account in the balance sheet to be collected.
Your condominium corporation relies on monthly fees to cover its operating costs: utilities, cleaning, maintenance, insurance, and reserve fund contributions. If multiple owners default, it can create short-term cash flow strain, especially in smaller corporations.
However, most corporations budget for a small percentage of arrears and have contingency reserves or if necessary, and only if absolutely necessary, borrow some cash from the Reserve Fund account.
Step Two: Legal Process (Lien and Enforcement)
Under the Ontario Condominium Act, once a unit owner is 90 days overdue, the corporation can issue a Notice of Lien. Here’s what follows:
Notice of Lien is sent to the owner.
If still unpaid, a Certificate of Lien is registered against the unit.
If non-payment continues, the condo can proceed with Power of Sale.
The lien takes priority over the mortgage, meaning the condominium is legally entitled to recover all unpaid fees, legal costs, and interest through the sale of the unit…before the lender (likely the bank) is paid.
Step Three: Real-World Risk Levels Are Low
While the process sounds dramatic, it’s rarely needed. At Sapphire Condominium Management:
95% of owners are enrolled in automatic pre-authorized payments
99.3% of owners pay their fees within the 90-day window
Most owners understand that unpaid fees impact their property value and their community and will make arrangements quickly if they fall behind.
Step Four: Even Worst-Case Scenarios Have a Built-In Reset
Even in the extremely unlikely event that several owners default and proceed through lien and sale, the end result is typically a new unit owner who purchases the unit in good standing. The condo recovers its money, the new owner begins paying fees, and the building continues operating as normal.
Condo corporations are designed to be financially self-healing over time. While temporary disruptions can occur, the lien and sale process ensures that arrears are ultimately collected.
Final Thoughts for Board Members
While it's important to monitor arrears and act quickly on delinquencies, this scenario is not a systemic risk for well-managed condos. Transparent financial practices, clear communication, and consistent enforcement of lien rights ensure your community remains stable, even when a few owners fall behind.
Want help reviewing your collections process or building a contingency plan for cash flow gaps? Talk to our team about supporting your board.
Wanting to learn more about condo fees? Here are some other helpful articles: