Managing a condominium can be both rewarding and challenging, especially when it comes to keeping up with the financial responsibilities of all unit owners. One of the most significant challenges a condominium corporation may face is when owners fail to pay their monthly fees or other shared costs. These payments, known as common expenses, are essential for the operation of the building, including maintaining common areas, paying for utilities, insurance, and covering management fees. When an owner misses their payment, it can create financial strain for the whole community, making it difficult to maintain the property and services that everyone relies on.
To help condominium corporations ensure they get paid and keep the community running smoothly, the Condominium Act offers a powerful tool: the condominium lien. This legal process allows the corporation to claim the unpaid fees directly from the delinquent owner’s property. In this blog, we’ll break down the condominium lien process to make it easier for you to understand and navigate, whether you’re a property manager, board member, or just someone interested in how this important legal remedy works.
Let’s explore the tool of chargebacks and liens in condos under the lens of using these methods to mobilize inappropriate intimidation and punishing behaviour against Owners.
Understanding the Condominium Lien Process
What Is a Condominium Lien?
A condominium lien is a legal claim placed on a unit in a condo building when the owner fails to pay their share of the common expenses. Under Section 85 of the Condominium Act, the condominium corporation can register a lien against the unit, which means the unpaid debt becomes a charge on the unit’s title. This lien gives the corporation the right to collect the money owed through various means, including selling the unit, if necessary. The great thing about a lien is that it takes priority over many other types of debts or mortgages that may exist on the property, which makes it a strong tool to ensure payment.
The Condominium Lien Process: A Step-by-Step Guide
Identifying the Missed Payment
The first step in the process is recognizing when an owner is not paying their common expenses. This could be missed monthly payments or a failure to pay a special assessment (like for major repairs). Once a default is identified, the condominium corporation needs to take action.
Providing Notice of Default
Before taking any legal steps, the corporation must notify the owner that their payment is overdue. This notice, often in the form of a demand letter, informs the owner about the outstanding balance and requests immediate payment. The owner is usually given a specific amount of time to pay the overdue amount.
Time Limits: The Three-Month Rule
The condominium corporation can’t wait indefinitely to pursue a lien. In Ontario, the law gives the corporation only three months from the first missed payment to register the lien. If this deadline is missed, the corporation may lose the right to collect the unpaid amounts using the lien process.
Registration of the Lien
If the owner still hasn’t paid after receiving the notice, the next step is to register the lien. This is done by filing the lien with the local land registry office. Once the lien is registered, it becomes a legal claim on the property, and the condominium corporation’s claim for payment takes priority over many other types of claims or mortgages.
Enforcement: Power of Sale
If the lien remains unpaid, the condominium corporation can move to enforce it. This can include taking legal action to force the sale of the unit to recover the outstanding amount. The unit is sold, and the money raised from the sale is used to pay off the debt owed to the corporation.
Why Condominium Liens Matter
The condominium lien process is crucial because it ensures that condominium corporations can collect the funds needed to keep the community functioning properly. Without this tool, delinquent owners could create financial difficulties for the entire building, affecting services like maintenance, insurance, and general management.
Liens are not just a collection tool—they also serve as a deterrent. When owners know that the condominium corporation can place a lien on their property for non-payment, they’re more likely to stay on top of their financial responsibilities.
Further Resources: Condo Lien
Want even more information about condo liens? Check out the article Understanding the Condo Lien Process: A Quick Guide For Applying Prudent Enforcement, not "Payable Punishment"Â
Our blog also offers a wealth of information on relevant condo law topics, making it a valuable resource for property managers and boards alike. Or, explore Stak’d, our library with over 10,000 hand-curated condo-related resources for additional summaries and tools, or dive deeper into our blog for more detailed discussions on topics that matter to you and your community.
Condominium Lien Process in Condos
Understanding the condominium lien process is vital for anyone involved in managing or owning property in a condominium community. This process helps to ensure that unpaid fees are collected and that the corporation can continue operating smoothly. By following the steps outlined in the Condominium Act, condominium corporations can protect their financial health and ensure that services and maintenance continue to meet the needs of all residents.
While the lien process can seem complex, it is an important legal tool that helps keep communities strong and functional. So, whether you're a board member, property manager, or a concerned owner, understanding how the condominium lien works ensures that the process is handled effectively and fairly. Taking proactive steps, such as sending timely notices and following legal requirements, can help avoid complications down the line. With the right approach, you can ensure that your condominium stays financially stable, no matter what challenges arise.
-Stratastic Inc.
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