Chargeback - Why You Might Be Billed

What is a Chargeback?

A chargeback, often called a back charge, occurs when a condominium corporation bills a unit owner for costs that are the owner’s responsibility. These charges typically arise when an issue originates from an owner’s unit or actions and results in expenses incurred by the corporation.

Why Can the Corporation Charge Back the Owner?

Condominium corporations operate under the Condominium Act and the building’s governing documents (e.g., declaration, by-laws, and rules). These documents outline when and how the corporation can assign costs to owners. Common reasons for chargebacks include:

• Damage Caused by the Unit or Owner

If an owner, tenant, or guest damages common areas, the corporation can recover the repair costs from the owner.

• Failure to Maintain the Unit

Owners are responsible for maintaining their units (e.g., plumbing fixtures). If negligence leads to damage (like a flood affecting common elements or other units), the corporation can charge back the costs of repairs.

• Violation of By-Laws or Rules

If an owner violates rules, such as improper disposal of items causing a blocked drain, the corporation may charge back the cost of addressing the issue.

• Insurance Deductibles

In cases where an owner’s unit is the source of damage, the corporation’s insurance may cover the repairs. However, the corporation can often backcharge the insurance deductible to the responsible owner.

How Are Chargebacks Processed?

The corporation typically sends the owner the letter with the invoices detailing the costs, referencing the relevant section of the governing documents or legislation. The owner must pay within the specified time to avoid penalties or legal action.

How to Avoid Chargebacks

Know Your Responsibilities: Understand the maintenance obligations outlined in your condo documents.

Report Issues Early: Promptly notify management of potential problems in the unit to prevent escalation.

Follow the Rules: Adhere to the condo’s by-laws and policies to avoid fines or additional charges.