Forming and Running a Housing Co-Op

Collecting Money Owed

Members must pay their monthly housing charge on time. When housing charges are not paid by the date they are due, they are called arrears.

Housing co-ops also use the term arrears for all other payments owing to the co-op. In addition to the housing charge, the member may owe money for:

• damages to co-op property,
• fines,
• key charges,
• bank charges for not-sufficient funds (NSF) cheques, and
• maintenance guarantees.

The province's or territory's co-op act and/or the co-op's by-laws or rules set out how arrears are treated by the co-op. Some co-ops will have an arrears collection policy.

Most co-ops have an occupancy by-law and an arrears by-law that deal with collecting money owed to the co-op by the member. The member or the co-op should check with the bylaws or rules to see how arrears are treated by their co-op.

Before Collecting Arrears, First Notify the Person Who Owes the Money

Before going to court to collect any money owed to the co-op, the person owing the money should be contacted by letter setting out the facts and requesting that immediate payment be made. This letter should also claim any interest owing. The co-op must keep a copy of the letter, as well as copies of any arrears, evictions or other notices in order to support its case for collection.

Arrange a Payment Schedule, if Possible

Ideally, the co-op and the member will be able to agree on a payment schedule for the arrears owed. This is referred to as scheduled arrears or special payment arrangement.

If the Member Still Fails to Pay the Arrears, Eviction of the Member May be Necessary

When a member is either unable or unwilling to pay their arrears, most co-ops will take steps to evict the member and recover the money owed. (See Eviction/Expulsion of Members.)

The co-op can recover money owed from a current or past member. Accepting payment for arrears does not stop the co-op from terminating membership or taking back the unit.

If the member's deposit will not cover the outstanding debt, many co-ops choose to register the debt with a credit agency or use a collection agency. Others will choose to use the small claims court system.

Small Claims Court can be an Effective Way to Collect an Outstanding Debt

If an evicted member does not voluntarily pay any arrears owed to the co-op, the co-op may go to the courts of the province or territory to sue the member for the amount still owing. Small Claims Court offers the co-op a simple and inexpensive method to collect money.

Further information on small claims court can be found in the Provincial/Territorial Small Claims Courts Section.

Nunavut does not have a small claims division in its court structure. See the Provincial and Territorial Fact Sheets for more information on this topic.