CONDO ARCHIVES

Failure to Register a Lien

October 2017

Registering a lien is one of the greatest protections afforded to condo owners.

A lien protects condo owners against those who fail to pay their share of condo fees.

 

 

 

A lien protects condo owners against those who fail to pay their share of condo fees.

Registering a condo lien protects owners by ensuring that the defaulting owner’s condo fees are recoverable.  Should the defaulting owner have other debts, payment of their outstanding condo fees becomes priority.  Should the individual remain unable to make payment of their condo fee debt, they may be forced to sell their suite.

To achieve this protection, condo corporations must register a lien within 90 days.  Condo fees owed for a period longer than 90 days do not receive the same priority.

One Ottawa condo corporation failed to register a lien within the required 90 days.  The owner failed to pay $450 in legal costs assessed to them resulting from a “cease and desist” order in 2012.  This amount was added to condo fees owed by the owner who ignored written requests for payment within two weeks.  The lien was filed more than 90 days after the payment deadline.  It was lifted and the condo corporation ordered to pay over $10,000 in legal costs to the owner.

In the case of one Toronto condo, the condo corporation failed to register a lien within three months after the default first occurred.  The suite was eventually sold but there were insufficient funds to pay the mortgagee and condo corporation.  The lien was ordered lifted because it was filed late.  The condo corporation lost its ability to collect $15,000 in costs incurred.  It was required to pay $10,000 in costs to the owner in addition to its $82,000 in legal costs and $62,500 to the mortgage lender.  They were unable to collect the $450 in outstanding condo fees over which the lien was filed.

When a condo corporation fails to register a lien within 90 days of the default occurring and the homeowner also fails to pay their mortgage, the lender may be entitled to sell the property and use proceeds for repayment of money due them.  Failure to properly register a lien could result in the condo corporation being unable to recover outstanding condo fees.

Failing to register a lien in time means the condo corporation loses its priority over the mortgage company.  Funds may still be recoverable through the courts if a lawsuit is filed.  This can be costly, time consuming and result in a less than satisfactory result.