Really Old Condominium Fee Arrears – What is the Impact of The Limitations Act?

How long is too long with Fee Arrears Liens?

A recent decision came out in support of condominium corporations that are trying to find the most cost-effective way of dealing with their condominium fee arrears.  The court affirms that the old “wait and see” option does exist once a lien has been registered against the title.

I have had a number of clients that have asked me about what options exist when you register a lien as against a title for condominium fee arrears.   There are a number of possible options such as foreclosure, judicial sale or even just a regular old debt action.  You can seek payment from the unit owner’s lender in some cases.  If you are a condominium board who is dealing with arrears – feel free to reach out to discuss some options.

However, the problem with many of these is that there may be some costs that are just not recoverable through the process.  The impact being that you may be spending good money after bad, without any guarantee of payment in the near future. This collection problem is one of the reasons I have boards consider high interest rates on arrears (subject to legislated limits).  While it may seem punitive, it factors in the risk that there may be some costs that are unrecoverable.

One options that remains is to do nothing at all.  At some point, the title will be conveyed to someone who wants it free and clear of encumbrance. Subject to taking care that it does not get discharged as part of a judicial proceeding, that individual (probably a lawyer) will come to the condominium corporation to ensure that it gets paid out and discharged. Again, there are risks – so make sure that you get advice prior to making this decision.

Yang v. Myriad Answers the Question

One of the concerns that I’ve had in the past is exactly the question that Yang v Myriad, 2023 SKKB 278 (CanLII), https://canlii.ca/t/k21fl dealt with.  When you “wait and see”, the condo fee arrears can get old.  A huge oversimplification* of the Limitations Act says that a claim cannot be commenced more than two years after the day the claim is discovered.  If the arrears are older than two years, does that mean that the condominium corporation is statute barred from bringing an action for one of the above noted remedies?  If it is statute barred, does it need to discharge the lien on title?

In Yang, the applicants were making the argument that as the lien had been registered more than two years ago, and no enforcement steps were taken, that the underlying action was statute barred.  They argued that as it was statute barred, that the registration on title for the lien for arrears should be removed.  In this case, no action was commenced, and so the merits of whether the limitation period had expired was not explored in detail.

The court reviewed a recent decision out of Alberta in coming to its conclusion.  It was notable that the court in Alberta reviewed a number of Saskatchewan non-condo decisions in coming to its conclusion.  In essence, it determined that even if the limitation period has expired on the action for the underlying debt that the lien can remain on the title as leverage for payout when the title is conveyed to a third party.

Conclusion

In short, it is an option to just leave the lien on the title and wait until you get paid.  However, it could be a long stretch if they do not sell for a while, and then you may be limited in some of the enforcement steps you can take if you have delayed too long.

*Side note – Limitations Act is way more complicated than the paragraph above suggests.  There are exclusions and exceptions, and there is way more analysis that goes into it than suggested above.  However, for this case, that is all you need to know.