Collection Tips – Part 2

You registered a lien on a unit…now what? Here are some considerations to keep in mind once you are in the lien process:

1) Once the lien process has begun, condominiums should generally continue to accept all payments from the owner, however:

  • You may not wish to accept the payment if the owner purports to make a partial payment in ‘full satisfaction of all arrears’.
  • If legal counsel is involved, you may want to direct that all payments be made through the legal counsel. Alternatively, if payments are made directly to the corporation, be sure to contact legal counsel to obtain an update of the outstanding arrears (including legal costs and interest). In this way, you will always know what amount remains outstanding.

2) Ensure that the Unit ledger is kept up to date.

3) Until the arrears are paid, the owner will generally not have the benefit of a vote. [See Section 49(1) of the Condominium Act, 1998 (the “Act”).]

4) In the event that the lien is not paid off, the Corporation will need to consider whether it will enforce the lien by way of power of sale. Section 85(6) of the Act states that the lien may be enforced in the same manner as a mortgage. Accordingly, the Corporation may wish to follow the procedures outlined in the Mortgages Act and the Land Registration Reform Act for sale of the unit. In some cases, foreclosure may also be worth considering. [Note: the lien must be enforced within 10 years from the date of registration of the lien.]

5) If there are any unsecured arrears (arrears that are perhaps not secured by the lien, for example because they fall outside of the three month lien period), the Corporation will need to consider whether it will be pursuing these arrears by way of court process. [Note: the two year general limitation period will likely apply.]

6) Also remember that, if the Unit is rented, Section 87 of the Act allows the Corporation to direct a tenant to pay rents directly to the Corporation. This collection right applies also to unsecured arrears. This can also assist the Corporation in collecting arrears in a more timely fashion.