April 8, 2015
Is someone at your condominium corporation in arrears for payment of common expenses? The following is a brief introduction to the complex world of condominium liens:
If a unit owner fails to contribute to the common expenses or reserve fund, the condominium corporation has a lien against the owner's unit and its share in the common elements for the unpaid amount, the interest owing on the unpaid amount and the reasonable legal costs and expenses incurred by the corporation in collecting or attempting to collect the unpaid amount, including the costs of preparing and registering the lien and its discharge.
However, the lien expires three months after the default that gave rise to the lien occurred unless, within those three months, the condominium corporation submits a notice of the lien to the district registrar for registration, in a form approved by the district registrar.
The Condominium Act also states that at least seven days before the Lien is registered, the condominium corporation must give the unit owner written notice of the lien. However, the condominium corporation may register the lien without prior written notice to the unit owner if the corporation is aware that a sale of the unit is pending.
Once registered in the relevant land titles office, the condominium corporation has the right to enforce the Registered Lien in the same manner as a mortgage is enforced under The Real Property Act.
With respect to priority, the registered Lien has priority over every registered and unregistered encumbrance even though the encumbrance existed before the lien arose; however the lien does not have priority over a claim of the Crown; aclaim for taxes, charges, rates or assessments levied or recoverable under The Municipal Act or The City of Winnipeg Charter; a prescribed lien or claim; a Notice on title about a phased development; a notice on title of proposed phasing amendment; a Notice of amendment to cancel proposed phase or extend time for completion; or a registered instrument referred to in clauses 45(5)(a) to (j) of The Real Property Act.
However, priority is not absolute.
On or before the day the Notice is submitted for registration, the condominium corporation must give written notice of the “lien” to each encumbrancer whose encumbrance is registered against the title of that unit and if there is “no notice” the lien loses its priority over an encumbrance. That being said, the notice can be given late. If the condominium corporation gives notice of a lien to an encumbrancer after the day the lien is registered, the lien has priority over the encumbrance only to the extent of (a) the arrears of common expenses or reserve fund contributions that accrued during the three months before the day notice is given and that continue to accrue after that day, (b) the interest owing on the arrears, and (c) the reasonable legal costs and expenses incurred by the corporation to collect or attempt to collect the arrears.
Condominium liens can prove to be difficult terrain for a condominium corporation to navigate and the notice provisions within The Condominium Act may jeopardize a condominium corporation’s entitlement to priority.