Condominium LiensCondominium LiensFor Aggressive & Essential

Collection of Unit Owner Arrears

Prepared by Michael Clifton, M.A., LL.B., ACCI (Law), partner, Clifton Kok LLP Legal Counsel

for the CCI – Golden Horseshoe Chapter 2008 Level 200 Course (Kitchener)

What is a Lien?

• A claim against property to secure a debt or obligation

What is a “condominium Lien”?

• A claim, in accordance with the Condominium Act, 1998, in favour of a condominium corporation, against a unit within that condominium, for unpaid common expenses and related amounts

defining common expenses“…the expenses related to the performance of the objects and duties of a corporation and all expenses specified as common expenses in this Act or in a declaration.”

i.e.,

• costs incurred due to occupancy of a unit in excess of Occupancy Standards By-law, per section 57(5)

• costs or damages awarded by a Court in an application pursuant to section 134(5)

• costs of unit owner’s work performed by the condominium corporation, per section 92(4)

• costs arising due to breach of a section 98 (“indemnity” or “alterations”) agreement, per section 98(4)

e.g.,

• indemnity provisions that specify that the costs incurred on account of unit owner damage to the property shall be paid by the owner as common expenses

• indemnity provisions that specify that the costs of enforcing the Act, declaration, by-laws and/or rules in respect of an owner shall be paid by the owner as common expenses

• other such provisions

what additional amounts arecovered by the lien?

“…all interest owing and…”

“…all reasonable legal costs...”

“…and reasonable expenses...”

“…incurred by the corporation in connection with the collection or attempted collection of the unpaid amount.” “…incurred by the corporation in connection with the collection or attempted collection of the unpaid amount.”

you cannot lien for anything else…

“fines”

indemnities not expressly made common expenses by the Act or declaration

demands or claims against the owner that are not defined as common expenses by the Act, declaration or court order

NO

“The right of a condominium to lien is very powerful and must be limited to the circumstances permitted by the Act. It should not be used as a tool or threat to extract payment from unit owners of amounts that are not properly the subject of a lien.”

How can a condominium lienbe enforced?

• In the same manner as a mortgage

…including Power of Sale if necessary

When does a condominium lien arise?

• The moment that common expenses are due and unpaid

How long does a condominium lien last?

• Three months from the date the arrears arise…unless a Certificate of Lien is registered before the end of the third month

procedure for registering acertificate of lien

First two months (generally), make all reasonable efforts to resolve the arrears

Within the first week (or so) of the third month, serve a Notice of Lien

No sooner than 12 days after the Notice of Lien is served, and before the end of the third month, register the Certificate of Lien on title to the owner’s unit

serving a notice of lien

Personal service

By prepaid mail addressed to the owner at the address for service appearing in the section 47(2) record of the corporation

get it right the first time

registering the certificate of lienon time

Every incident of arrears gives rise to a new lien until a certificate is registered

A certificate of lien can only be registered after a notice of lien has been given

The notice of lien can only set out existing arrears, not future anticipated arrears

Therefore, to avoid missing some arrears, the certificate must be

registered within the month that the notice of lien is delivered

once a certificate of lien is properly registered within the allotted time…

it has priority(commencing from three

months prior to registration)over almost all other

encumbrances on title

and subject to the mortgagee(s), if any, having been properly served

it covers all future arrears(till the amounts covered are paid in full)

only lien for actual common expenses

-complete and serve the notice properly / have a properly constituted section 47(2) record

know the correct legal description of the property identify and serve all registered owners of the unit

register the certificate of lien on time

notify the mortgagee immediately

rely on legal counsel