What You Need to Know About Condo Liens under Section 85 of the Condominium Act

By Slonee Malhotra and Ashley Hizo

What Is a Condominium Lien And When Can It Arise?

A lien is a legal claim which is registered against an asset in an effort to collect back a debt. In the case of a condominium lien, pursuant to s.85 of the Condominium Act (CA), a condominium corporation has an automatic right to lien a unit owner if that unit owner does not keep current with their common expenses.

The automatic lien right includes the ability for the condominium corporation to seek payment of the overdue common expenses for up to three months of arrears to the date of the notice being issued (and then any future arrears from the date of the notice), all interest owing as well as reasonable legal costs and expenses incurred by the condominium corporation in connection with the collection of the unpaid amount.

If you are a unit owner that has received a notice from a condominium corporation advising that a lien may be registered against your unit, act immediately to get in touch with the condominium corporation to negotiate a payment plan. Failure to act may result in a lien being registered and power of sale proceedings initiated.

What are the Obligations of the Condominium Corporation to Notify the Unit Owner re an Impending Lien?

While a condominium corporation has automatic lien rights against an owner’s unit if common expense fees are left unpaid, there are several notice requirements as outlined by the Condo Authority of Ontario, that a condominium corporation should take note of:

1. Send a Notice of Lien to the Unit Owner

   A copy of the notice of lien form to an owner can be found here. If the owner does not pay within 10 days, the Condominium Corporation may proceed to step two.

2. Register a Certificate of Lien if Payment Is Not Received

   Condominium Corporations can register this certificate if the outstanding amounts are not paid within 10 days of the Notice of Lien. Certificates cover all amounts owed under the lien (inclusive of legal fees.)

3. Initiate a Notice of Power of Sale if Lien is Not Repaid following Registration of Certificate of Lien

   Condominium Corporations can initiate power of sale process 15 days following the registration of the certificate of lien. This notice includes a redemption date which is 45 days from the date of the notice’s issuance

4. Obtain Judgment from the Courts

   Condominium Corporations can seek the Ontario Superior Court of Justice for an order granting the possession of the unit and any amounts they are owed.

5. Sell the Condo Unit to Discharge the Lien

Condominium Corporations can sell the unit and recoup the amounts owed under the lien from the sale proceeds. Any balance of funds must then be paid to the former owner within 90 days of the sale.

Additional Costs in Favour of the Condominium Corporation

While s.85 allows for the automatic registration of a lien in respect of common expenses, s.134 sets out that a condominium corporation may also make an application to the Court for an order enforcing compliance. Expenses in respect of compliance and enforcement can only be the subject of a lien if the corporation has obtained a compliance order from the Court.

Failing to obtain a compliance order from the Court restricts a corporation to recover only the arrears, interest, legal fees and actual expenses incurred in collecting the arrears – any compliance fees cannot be recovered. Therefore, prior to being able to register a s.85 lien to recover fees or costs incurred in the context of a compliance matter, the condominium corporation must first obtain a s.134 order to that effect.

For any questions related to this article or legal assistance regarding condominium liens, please reach out to one our experienced real estate or condominium development lawyers at SorbaraLAW.