The timely payment of common expenses (commonly referred to as “condo fees”) is essential to the survival of condominium corporations. For this reason, the Condominium Act has put in place various mechanisms to facilitate the collection of these common expenses. One of these mechanisms is the corporation’s ability to register a lien on the defaulting unit. This lien gives the corporation priority over the mortgagee. By registering a lien, the corporation essentially becomes a secured creditor. However, to benefit from the protection of such a statutory lien, the corporation must register the lien within 3 months of the owner’s default to pay the common expenses. Any delay by the corporation to register its lien can be deadly.
To illustrate this, let’s have a look at the TSCC 1908 case. In this case, while nobody disputed the fact that the common expenses were in serious arrears, TSCC 1908 failed to register its lien within 3 months of the owner’s failure to pay the common expenses. The delay in identifying the existence of arrears was the result of the Declarant’s failure to turn-over the corporation and to disclose financial documents in a timely manner. By the time the arrears came to light, they were nearing $50,000. When TSCC 1908 registered its lien, the lien only protected the prior three months of arrears. The rest of the arrears may still have been collectible against the owner, but the corporation could not rely on the lien to preserve its priority over the mortgagee.
