Condominium Fee Collection

business meeting

When doing real estate files, I have seen a number of estoppel certificates that show substantial arrears, but are not protected by the lien allowed for under the Condominium Property Act.  There are good reasons for boards to mechanically apply a lien against a property before 3 months of arrears have accumulated:

Keeping Priority: The Act allows for the lien to be in priority to a registered mortgage for 3 months of arrears, and any accumulated fees subsequent to registration against the title.  If a property does not have enough equity to pay out the mortgage and the condo fees, the board wants to ensure that they get paid out first.

Cash flow Management: Arrears that grow and grow can create cashflow problems for boards.  Timely collection and penalties for late payments will signal to owners that they should be paying their assessments in a timely fashion.  Coupled with interest bylaws, there will be a strong disincentive to having owners avoid paying their condo fees. 

These liens will often trigger the payment of the arrears by mortgage companies.  The mortgage companies may pay the arrears, and add all of the costs back to the principal of the owner’s mortgage. Again, final result being that the arrears are paid.

No cost (sort of):  There will be a cost to the owner.  The owners can make them responsible for the payment of the legal fees and registration costs of the lien through the bylaws and the Act.

The board may need to cover the cost of the lien registration upfront, or at least in a timely fashion following its registration.  If doing the work yourself, you will be responsible for at least the amount owing to land titles for registration, and any searches necessary to complete. However, when these fees are paid, the board can consider including them as part of their assessment, and charging interest on them like the remainder of the fees.

I appreciate that this is a bit of work generating proposition for me and other lawyers, but I would suggest that you talk to your lawyer about getting a registration system organized for these liens.  We can do a search, identify the right parties to provide notice to, and register the lien. 

If you need some help getting this set up, give me a call.

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