Can a Condo Association Cut Utilities for Non-Paying Owners?

In order for a condominium Association, which include all units owners, to operate efficiently, its members must pay their dues timely. If you are a property manager or in charge of a condominium association, then you understand the challenges of enforcing and collecting monthly dues and assessments. The question that is generally posed, is whether it’s worth implementing collection practices on delinquent unit owner. Invariably, that discussion includes balancing the cost of collection versus the prospect of collecting.

The condominium documents, which include the declaration and bylaws, provide for substantial rights of the association. However, exercising those rights takes time and resources. As a business, the association is charged with the duty to operate efficiently and effectively.

Non-paying unit owners can be a painful and frustrating issue and collecting can seem equally frustrating. However, it is critical that you fully understand the collection process.

Monthly assessments are generally used to provide and maintain elements that are enjoyed by all units owners. Oftentimes utilities, such as water, are paid for by the association. Thus, it is easy to follow the logic that if one doesn’t pay his/her monthly assesments, which include water, that he/she doesn’t have the benefit of utilities. If the Board is authorized to take such action in the condominium documents, then you may be able to. However, that specific right is not generally included.

More often than not, you will find that the association, through its board of directors, is granted powers to take whatever means or legal means are necessary to carry out the administration and management of the condominium association.

In the case of Western v. Chardonnay Village Assn., Inc., the Association decided that it would exercise its rights against a non-paying unit owner by shutting off his water. Water was paid using association funds, and thus, was a common expense.

In response, the unit owner filed a lawsuit requesting that his water be turned back on. The court granted the unit owners request, holding that “absent authorization in declaration for the association to shut off water, it could not do so.” The court also ruled that “by legal means” means exercising its rights in court, not illegal vs legal, in a criminal context.

The appellate court, in affirming the trial court’s decision, reasoned that there were other means available to the association to exercise its right to collection, such as filing a lien and a lawsuit to collect those monies due.

What is the takeaway from this decades long ruling?

An Association can collect unpaid dues, an Association can also file a lien encumbering the property and a lawsuit to collect, and once a judgment is granted, the Association can have that property sold to pay for the past owed dues, atty fees and costs. But more extreme measures, such as turning off a unit’s water or power supply, will not be tolerated unless the right to do so is present in the condominium documents.

If your association is struggling with unit owners becoming delinquent on their monthly dues or assessments, call our office today to discuss what options may be available and how we can get your association back on track.