Part Two: What to Do When a Member Doesn’t Pay Their Bill
Water co-ops depend on timely payments from members to keep operations sustainable. Every dollar collected from billing goes directly toward operations, maintenance, reserves and the long-term sustainability of the water infrastructure that serves your community.
When a member does not pay, the matter must be addressed quickly, and should follow the structured collections process authorized by the co-ops bylaws and service agreements.
This article walks through the options after the formal demand letter has been delivered for non-payment.
What Should Already Be Done
Before taking any of the steps below, your co-op must have already worked through the process outlined in our Part One: Understanding the Collections Process. To recap, reminders to the delinquent party have been sent, a formal demand letter has been issued and the member has been given a fair opportunity to pay or make arrangements. Every step must be documented and should follow the process as outlined in your co-op’s bylaws and service agreement.
At this point, the Board can declare the members as “Not in Good Standing” which has consequences for the member.
If all of these actions have been done and documented, and the balance remains unpaid, the following options are available as next steps.
Option 1: File a Caveat on the Land Title
If your member service agreement allows, your co-op may be able to file a caveat against the member's land title through Alberta Land Titles. Water co-ops can file caveats through a partnership with the Federation of Alberta Gas Co-ops (FedGas). Before proceeding, confirm that your member service agreement supports this action. If you are unsure, consult a lawyer before filing.
A caveat is a legal notice registered on the title of a property. It signals that the co-op has a financial interest in that property until the debt is resolved. It does not transfer ownership, but it prevents the property from being sold or refinanced without the outstanding balance being addressed first.
Once a caveat is filed, send written notice to the member confirming it has been registered and that it will remain on title until the debt is paid in full.
Option 2: File a Civil Claim
A civil claim through the Alberta Court of Justice is used to obtain a formal judgment for the amount owed. This option can be pursued on its own or alongside a caveat.
Option 3: Engage a Collections Agency
If internal efforts have failed and you are not yet ready to pursue a civil claim, another option is to hand the file over to a licensed collections agency. The agency pursues repayment on the co-op's behalf through calls, letters and other contact with the debtor.
A few important things to know before going this route:
- The agency works under a formal agreement with your co-op.
- They will likely charge a significant fee or take a percentage of what is recovered.
- This step can only be taken if it is supported by your co-op's collections policy.
- The member must have already received proper notice and a fair opportunity to pay before the file is escalated.
Board approval is required before handing an account to a collections agency.
The Formal Demand Letter
Before filing, a written demand letter must have already been sent to the member. This is what is referred to as the formal demand. The letter should state the reason the money is owed, the total amount owing and a deadline to pay. It must be dated and addressed to the member by name and address. Keep a copy of the letter, as you will need it when you file.
Going to the Courthouse
You must attend the courthouse in person during business hours to file your Civil Claim. The Alberta Court of Justice Civil Division handles most debt disputes and accepts claims up to $100,000, which covers any typical water co-op arrears situation.
The Civil Claim form can be downloaded ahead of time from albertacourts.ca, but filing must be done in person. Court staff cannot give legal advice or predict outcomes, but court information coordinators can help you find the right forms and explain how to complete them.
There is a filing fee. For claims valued at $7,500 or less, the fee is $100.
Completing the Civil Claim Form
Your claim should clearly state:
- Location and date of claim.
- The total amount owing, applicable interest and other costs.
- Number of witnesses you will be calling including yourself.
- The full legal name and address of both the member and the Water Co-op.
- The reason for the claim (choose Debt Claim on the Civil Claim form).
Serving the Claim
Once filed, the claim must be formally delivered to the member being sued. This must be done within one year of the filing date. Whoever delivers the documents must complete an Affidavit of Service, available at the courthouse or on the Alberta Courts website.
What Happens After Serving the Claim?
The Member Pays or Settles
This is the best outcome. Some members, once formally served, will pay in full or reach out to negotiate. Any payment arrangement must be put in writing and applied consistently across all members. Notice must be given to the courts.
No Response: Default Judgment
If the member does not pay or file a Dispute Note within 20 days of being served (in Alberta), you can file a Request to Note in Default and obtain a Default Judgment. A Default Judgment is issued without a hearing.
The Member Disputes the Claim
If the member files a Dispute Note, the matter will proceed to mediation, a pre-trial conference or a trial. Mediation can be requested at the time of filing.
You will need to prepare your case by summarizing the documented steps already taken, such as demand letters and disconnection notices. Provide documents to support your case including the service agreement, policy, procedure and bylaws that authorized the charges.
A mediator will help both parties reach a settlement, which can then be formalized into an agreement. If no settlement is reached, the matter proceeds to trial.
Judgment
Whether resolved through mediation or decided at trial, the result is a judgment. A court judgment is valid for 10 years from the date it is issued. A judgment is an important milestone, but it is not the end of the road. If the member still does not pay voluntarily, legal enforcement tools are available, including garnishing wages and seizing assets. Those actions will be covered in Part 3 of this series.
For Additional Information:
Review your membership agreement and bylaws for your water co‑op, and visit our Late Payments, Collections, and Caveats Governance page for more information.