How to collect money owed by housing co-op members

Housing co-ops use the term “arrears” to cover all the different payments owed to them by members. In addition to the monthly housing charges, co-op members could owe money for:

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

The management of arrears by a co-op may be described in the co-op act for each province and territory. Most housing co-ops also specify the process for arrears collection in their rules or bylaws. Members should check the rules or bylaws so they know exactly how their co-op collects money owed.

Notify the member

The co-op should start the arrears collection process by sending a letter to the person owing money. This letter should clearly explain the facts and ask that the money be paid right away, including any interest owing.

The co-op should keep a copy of the letter for its records. Doing so will help support the case if it’s referred to a collection agency or small claims court later on.

Arrange a payment schedule

Sometimes, a member wants to pay their arrears but is simply unable to do so at that moment. In this case, the co-op should arrange a payment schedule, also known as “scheduled arrears” or a “special payment arrangement.”

Evict the member, if necessary

If a member can’t or won’t pay their arrears, co-ops can choose to evict the member and recover what’s owed. Money may be recovered from current or past co-op members. Even if the person pays what’s owed, the co-op may still end their membership or take back their unit.

Refer the case to an agency or small claims court

A member's deposit alone is often not enough to cover the debt. In this case, co-ops can register the debt with a credit agency or collection agency. They can also sue the member in small claims court, which offers a simple, inexpensive way to collect outstanding debts.