Condominium ownership places the burden on owners of units within the condominium corporation to contribute to the common and capital costs required for the upkeep and management of the complex. The Condominium Property Act, 19931 (the "CPA") establishes that a condominium corporation is responsible for all expenses and liabilities incurred concerning the common property and common facilities.2 To do this, section 55 of the CPA requires a condominium corporation to establish both a common expense fund and at least one reserve fund.3 The common expense fund receives contributions from the owners which are used for the control, management, and administration of the common property, common facilities, enforcement of the bylaws, insurance premiums and all other expenses incurred managing the complex.4 Reserve funds are established for to cover unforeseen common expenses or major repairs or replacements the corporation may require5, such as roofs, parking lots and pools. These fees are charged monthly to the unit owner for the corporation's benefit. Under the CPA, owners have an express duty to pay their contributions. 6 But what remedy does a corporation have against an owner who fails to pay their monthly condominium fee, thereby failing to contribute to the corporation's established funds?
When a unit owner fails to pay their required contributions, the CPA enables the corporation to register a lien against the title of a unit for the amount of a contribution to the common expense or reserve fund levied which has not been paid.7 Upon registration of the lien, the corporation holds a lien against the owner's title that is equal to the amount of the unpaid contribution and the corporations administrative expenses, including the costs of registration, interest and any associated discharge fees.8 Provided the corporation gives the required written notice to the unit owner and any mortgage holder on the title of the unit,9 once the lien is registered, the CPA provides the corporation a super-priority over any registered or unregistered lien even if the other interest existed before the registration of the lien,10 excluding liens for taxes or prescribed by the CPA.11
Once the lien is registered, the corporation has two primary ways to collect pursuant to the lien.
First, the CPA imparts additional terms in conditions to mortgages held on condominium units. Section 63.2 of the CPA states that any mortgage of a unit is deemed to contain the terms that any arrears of an owner's contribution may constitute a breach of their mortgage,12 and allows the mortgagee to collect the owner's contribution and remit it on their behalf to the corporation.13
The second means of collection is by the statutory lien granted to the corporation. Section 63(2)(b) states that the lien may be enforced in the same manner as a mortgage. Therefore, the CPA grants the corporation the ability to foreclose against the unit for the contribution arrears, in the same way a bank would foreclose on a private dwelling, subjecting the unit owner to the potential of taking title to the property or having the unit sold through a forced judicial sale, as well as a costs award for the proceedings. Once in the foreclosure process, the foreclosure proceeds like it would for residential proceedings.
Although generally small monthly contributions, unit owners and condominium corporations alike should be reminded of the corporations' duty to enforce their bylaws. Unit owners should avoid going into arrears of their contributions to avoid being engaged in the enforcement process. Corporations should note that although monthly contributions are relatively small amounts, there is a requirement for the condominium corporation to take steps to collect and enforce contribution arrears pursuant to their statutory duties. Failing to enforce this could open the corporation up to liability concerning the other owners.
Footnotes
1 The Condominium Property Act, 1993, SS 1993, c C 26.1 ("CPA")
2 CPA, at s.54
3 CPA, at s.55(1)
4 CPA, at s.55(2)
5 CPA, at s.55(3)
6 CPA, at s.54
7 CPA, at s.63(1)
8 CPA, at s.63(2) and (4)
9 CPA, at s.63.1(3)
10 CPA, at s.63.1(1)
11 CPA, at s.63.1(2)
12 CPA, at s.63.2(1)(b)
13 CPA, at s.63.2(1)(a)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
