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Condominium Liens

By on May 04, 2011 in Legal
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Simply a lien is the right to take and hold or sell a property of a debtor (someone owing money) as security or payment for a debt.  The most common liens are construction liens whereby someone that performs work or supplies material to a property and is owed money for those services has the right to register a lien on the property which in effect encumbers the title to the property, until that debt is repaid.

Under the Ontario Condominium Act, 1998 (the “Act”), a condominium lien is a remedy available to the condominium corporation against unit owners who default on their common expenses and other charges (such as utilities) in order to recover those contribution payments owed by that owner to the condominium corporation.  Under the Act, upon default (non-payment), the corporation automatically has an unregistered lien against the owner for the full amount in arrears for up to three months plus legal fees and interest.  The condominium lien is an extraordinary remedy because the condominium lien has priority over almost anything else registered or not registered before it, including a mortgage.  Further, under a condominium lien, the condominium corporation can conduct a power of sale, which means selling the unit to another party for the repayment of the debt.  The super priority status of the condominium lien means that upon a power of sale, the lien gets paid out first and other encumbrances after.  Another interesting feature of the condominium lien worth adding is that if the condominium unit is rented, the condominium corporation may also collect the arrears directly from tenant.

Due to the three (3) month threshold, a condominium corporation must act fairly quickly, and in most cases they do, when enforcing the condominium lien however, under the Act the condominium corporation must give the owners proper notice of default and of any impending registration of a condominium lien in order to allow the owner to bring their obligations into good standing.

Therefore it is extremely important to be vigilant and to pay common expenses and other charges owed to the condominium corporation in a timely manner in order to avoid paying legal fees and surely to avoid a power of sale.

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About the Author

Maxim Zavet is a real estate lawyer in the city of Toronto. His practice is primarily focused in various residential and commercial real estate transactions for individuals, corporations and developers. Maxim had worked at some of Toronto's premier real estate law firms before becoming a founder and partner at PLZ Law.
  • Tchoppy

    I think the condo act needs to be changed to protect condo owners from improper liens being registered against them. There is no appeal process or protection for condo owners if you have a corrupt board and property management company.