Part 45 published on 01/02/14
Condominium corporation not entitled to lien for “old” arrears
The owner (who owned 2 units) had failed to pay common expenses since January 2009. The condominium corporation did not register a lien against the units. On May 30, 2012, the condominium corporation applied, under s.134 of the Condominium Act, 1998, for an order for payment of the arrears, interest and costs. The corporation also sought an order that the condominium corporation be permitted to register a lien against the owner’s units, for recovery of those amounts, under s.134(5) of the Act. The unit mortgagee (holding a first mortgage against the two units) opposed the application.
The Court said:
- “Having failed to preserve its lien rights under s. 85(2) (of the Condominium Act, 1998), TSCC 1908 seeks to employ s.134 of the Act, to ‘revive’ the lien rights.”
- “If TSCC 1908’s position is accepted, a condominium corporation can ‘revive’ an expired lien by characterizing it as damages for failure to pay common expenses, obtaining an award therefore, and adding those damages to the common expenses for the unit. In this case, when Stefco fails to pay this amount, TSCC 1908 will register a new lien, capturing all of the common expense arrears dating back to 2009.”
- The Court considered the case of York Region Condominium Corporation No. 633 v. 1262018 Ontario Inc. (summarized in Condo Cases Across Canada, Part 26, May 2009). The Court noted that, in that case, there was no mortgagee named as a party and said that the decision in the York Region Condominium Corporation No. 633 case “cannot be relied upon for any precedential value”.
- “The lien registration scheme in s.86 balances the rights of condominium corporations to collect common expenses with the rights of mortgagees to limit their exposure to priority claims. Section 86 of the Act sets out the scheme underlying the priority regime. A central feature of the priority regime is that the lien loses priority if notice is not given.”
The Court held that the condominium corporation was entitled to an order that the owner, Stefco, pay the common expense arrears commencing January 1, 2009, with interest. However, the condominium corporation was not entitled to any lien against the unit to recover those amounts.
[Editorial Note: I note that the decision contains no discussion of the 2-year basic limitation period which generally applies to unsecured claims.]