A Condominium Corporation in cases where an owner of a Condominium Unit fails to pay the ‘common expenses’ or ‘special assessment’ charges may place a lien on the Condominium Unit. In such cases the Property Management Company, or generally the Property Manager employed by them will be required to, by written communication, advise the Condominium Corporation or the Property Management Company as their agents, that the owner of a certain Condominium Unit has failed to pay a special assessment charge or common expenses. Once this is done a notice of lien may be issued. As per the Condominium Act a notice of lien is a mandatory prerequisite of registering a certificate of lien. The notice of lien allows for the owner of the unit with a period of 10 days to pay off the total amount secured by lien. The amount secured by the lien may as well as any common expenses and/or special assessment charges owed, include interest, legal costs and/or collection expense. If these arrears are not cleared within 10 days of the notice of lien then a certificate of lien may be registered.
It is important to note however that as per the Condominium Act the right to register a certificate of lien expires three months past the date of arrears, therefore it is the important that the Condominium Corporation and/or Property Management act prudently and within a timely manner.
Nevertheless, once a certificate of lien has been properly registered it is not a matter which the condominium owner should take lightly. The initial effect of a registered lien strips the right of the owner of his voting rights at owners’ meetings. Beyond the loss of voting rights, the failure to discharge or pay-off the lien in full can expose the Condominium Owner to the risk of the Condominium Corporation applying to the courts to force a sale of the property. This is generally done after a notice to the mortgage financers (if any) is given. Since a lien takes priority in the case of a Court ordered sale of the property, the mortgage financers may discharge the lien from their own funds and then turn to the Condominium owner for reimbursement. If the Condominium Owner fails to reimburse the Mortgage Financer for the discharge of the lien when demanded to do so the Mortgagee, the amount of the mortgage loan along with the reimbursement (with any interest and costs) may then be considered payable and due by the Mortgagee. Alternatively, if the Condominium as been rented out by the owner the mortgage financer in order to be reimbursed may even attorn the rent of the unit until the discharge of the lien along with interest and costs is paid off.
For the abovementioned reasons it is advised to the Condo Unit Owner that despite any dispute with the Condominium Corporation or Property Management company over common expenses or special assessment charges the amounts should be paid in order to avoid a lien being registered against the property. The services of a qualified and reputable real-estate lawyer should be acquired in order to better assess the dispute if one arises.
For more information please contact one of our experienced Real Estate Lawyers at MEHDI AU LLP.
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