On Condo Liens – And How Powerful They Are
The common areas of a condominium property — think swimming pool, yards, elevators, etc. — are commonly owned by the all unit owners in the condominium. Owners of units in the condo make “common expenses” payments in order to maintain (and maintain an interest in) the common areas. But what happens when non-payment of common expenses by a unit owner occurs?
That’s the topic of today’s post at JD Supra, also known as my favorite legal blog in the commercial property market space. In Matthew J. Wilson’s post, we learn that non-payment of common expenses is a matter usually resolved by the condominium corporation exercising a lien right against the non-payer’s unit, such lien to cover unpaid amount, collection and legal costs, and interest.
But as is so often the case in the legal arena, little happens automatically and much is about dotting I’s and crossing T’s. In the case of non-payment of common expenses, a Certificate of Lien is essential to obtain – and hoops need to be jumped through to obtain it:
In order to facilitate this form of communal ownership of property, individual unit owners have to make “common expenses” payments in order to maintain the common elements of the condominium. Since each individual unit owner depends on the others to make their payments in order to maintain the property, the Condominium Act, 1998 provides assistance in enforcing the payment of common expenses. If a unit owner defaults in payment of his or her common expenses payments, the condo corporation has a lien right against the defaulting owner’s unit. The lien covers the unpaid amount of common expenses as well as the interest, reasonable legal costs, and legal expenses incurred by the corporation in collecting the outstanding payment.
Registration of Liens
While the corporation’s lien arises immediately and automatically upon default, there are several legal steps that must be taken. First, a Certificate of Lien should be registered within three months after the default first occurred. A lien is only enforceable for non-payment going back three months prior to registration. For instance, if default began on January 1, but a lien was only registered on April 30, the condo corporation would only have an enforceable lien for arrears owing after February 1. However, once registered the lien is effective for any continued non-payment that occurs after registration.
As well, notice of the lien should be provided to the unit owner 10 days before registration personally or by registered mail. It should also be provided to any others who have a legal interest in the unit, such as a bank holding a mortgage, on or before registration.
Read Wilson’s entire post at JD Supra here. And remember: nothing you read here at The Source should be constituted as legal advice.