Strata Alert: Collecting the Costs of Collections

Collecting the Costs of Collections


Alex J. Chang, Associate
Phone:  604-685-1255



Strata corporations can be understandably concerned about the legal cost of collecting arrears for unpaid strata fees and levies from owners. This is why it was welcome news to many when the Court of Appeal in KAS 2428 v. Baettig2017 BCCA 377, confirmed that a strata corporation’s actual legal costs may be claimed under a lien.

In the more recent decision of 625536 B.C. Ltd. v. LMS4385, 2021 BCCA 158, the Court of Appeal revisited Baettig to clarify when those legal costs can be claimed.

In LMS4385, the respondent owned multiple strata lots. The appellant, strata corporation, sent multiple demand letters to the respondent for overdue strata fees and the legal cost of those demand letters. The respondent sent a payment for the overdue strata fees but refused to pay the legal costs because no lien had been filed on their strata lots yet. The strata refused to accept payment of the strata fees without the legal costs.

The legal cost claimed for sending four demand letters concerning the multiple strata lots was $2,600 plus disbursements.

Under s. 112 of the Strata Property Act, a lien may only be filed after the strata corporation gives 2 weeks’ notice demanding payment. The respondent sent the payment 23 days after the demand was sent and the strata rejected the payment on the same day.

The Court held that s. 118 of the Strata Property Act does not permit a strata corporation to recover its legal costs of complying with s. 112 before registering a lien. In other words, if the owner’s payment is received before the two-week notice passes under s. 112 or a lien is not yet filed the strata cannot claim its legal costs. However, once the two weeks pass and the lien is filed, those costs can be claimed. The Court noted that the minimum two-week period between the notice of demand and the lien, “enables strata owners who may have innocently failed to pay their strata fees to quickly rectify that failure.”

The main lesson from this decision is that there is always a slight risk that the legal cost of issuing a demand under s. 112 will not be recoverable if the owner makes a prompt payment. Strata corporations and managers should ask their strata lawyers about how the firm will bill them in those circumstances.

The other lesson is that the risk of not recovering costs can be minimized by registering the lien immediately if payment is not received within the two-week notice period.

WHAT WE DO:  Lesperance Mendes has a dedicated strata collections department with plans that minimize the risk and cost of collections for your strata corporationTo inquire, please contact Paul G. Mendes, Alex J. Chang or Amanda Magee.

THIS ARTICLE IS NOT LEGAL ADVICE:  This article provides general information and should not be relied upon without independent legal advice with respect to the specific facts of your case.