09/04/2021 – Jurisdiction Alberta
Part 74 published on 01/03/2021
Court determines priorities as between condominium corporation and mortgagee. Condominium corporation’s legal charges not secured by the corporation’s caveat.
The condominium corporation had registered caveats against a unit for amounts owing by the owners to the condominium corporation. The owners had gone bankrupt and the first mortgagee, TD Bank, was seeking an order for sale of the unit. The condominium corporation had made claims, as an unsecured creditor, in the owners’ bankruptcy proceedings and received some payments (dividends) from those bankruptcies.
The Court was asked to determine the rights and priorities (in terms of their respective interests in the unit) as between TD Bank and the condominium corporation.
The Court held as follows:
A caveat registered by a condominium corporation creates a charge against the unit for unpaid special assessments plus accrued interest, and for other unpaid contributions (including subsequent required common expense contributions) levied against the owners pursuant to Section 39 of the Condominium Property Act, as well as interest accruing on those other contributions. These amounts had the benefit of “super-priority” against the unit, and accordingly had priority over the TD Bank mortgage. ALSO: The Condominium Corporation had not lost its priority by reducing its claim to an unsecured judgment and receiving dividends in the bankruptcy proceedings of the owners.
HOWEVER: The condominium corporation was not generally entitled to priority over the TD Bank for the condominium corporation’s legal charges. The condominium corporation was entitled to recover from TD Bank reasonable legal charges and interest and expenses attributable to the condominium corporation’s dealings with the TD Bank. But the corporation’s legal charges were generally not secured by the caveat.