What happens if a condo owner does not pay common expenses?
A condominium lien is not an ordinary debt. It attaches to the unit, it outranks a mortgage registered years earlier, and it exists before anything appears on title.
The short answer
The corporation gets a lien against the unit as soon as the owner defaults, covering the unpaid amount with interest and reasonable costs. It expires three months after the default unless a certificate of lien is registered. Robin Patel, a REALTOR® in the Greater Toronto Area, reads the status certificate for this.
Written forBuyers of a condominium unit in the GTA whose status certificate shows arrears, and owners who have fallen behind on common expenses and received a notice from the corporation.
The short version
- If an owner defaults on common expenses, the corporation has a lien against the unit and its appurtenant common interest, together with interest and reasonable legal costs and expenses.
- The lien arises on the default itself, before anything is registered against the unit.
- It expires three months after the default unless the corporation registers a certificate of lien within that time.
- The corporation must give the owner written notice at least 10 days before registering a certificate of lien.
- The lien has priority over every registered and unregistered encumbrance even where the encumbrance existed first, apart from the exceptions the Act lists.
The lien exists before anything is registered
This is the part that surprises people, including owners who assume nothing has happened yet because nothing has appeared on title. Where an owner defaults in the obligation to contribute to the common expenses payable for the unit, the Act says the corporation has a lien against the unit and its appurtenant common interest.
The lien covers more than the missed payments. It extends to the unpaid amount together with all interest owing and all reasonable legal costs and reasonable expenses incurred by the corporation in connection with the collection or attempted collection of that amount. Registration is a later step, and it does not create the lien.
Registration is a later step, and it does not create the lien.
The three month clock, and the notice
The Act puts a limit on how long that position can sit unrecorded. The lien expires three months after the default that gave rise to it occurred, unless within that time the corporation registers a certificate of lien in the form prescribed by the Minister.
There is also a warning step built in. At least 10 days before the day a certificate of lien is registered, the corporation must give written notice of the lien to the owner whose unit is affected, and on or before the day of registration it must notify every encumbrancer whose encumbrance is registered against the title of the unit. So a registered lien should never be the first anyone hears of it.
| Question | What the Act provides |
|---|---|
| When does it arise | On the owner default in the obligation to contribute to common expenses |
| What does it cover | The unpaid amount, all interest owing, and reasonable legal costs and expenses of collection |
| How long unregistered | It expires three months after the default unless a certificate of lien is registered |
| Notice to the owner | Written notice at least 10 days before the certificate is registered |
| Notice to lenders | Written notice to every registered encumbrancer on or before the day of registration |
| Enforcement | The lien may be enforced in the same manner as a mortgage |
| Discharge | On payment, the corporation registers a discharge and advises the owner of the particulars |
Why it outranks a mortgage
A condominium lien is not just another claim in the queue. The Act gives it priority over every registered and unregistered encumbrance even though the encumbrance existed before the lien arose, which means it can come ahead of a mortgage registered years earlier.
That priority is not unlimited. The Act excepts a claim of the Crown other than by way of a mortgage, a claim for taxes, charges, rates or assessments levied or recoverable under the municipal and education statutes it names, and any lien or claim that is prescribed. But as against an ordinary mortgage lender, the ranking is the striking part, and it explains why corporations and lenders both take these seriously.
What a buyer actually does about it
The status certificate is where this surfaces, and it is the reason the document exists rather than a formality to be collected and filed. Arrears, a lien, or a notice that one is coming are the things to look for, and they belong in front of a lawyer rather than being skimmed by the buyer alone.
The distinction to hold on to is that the lien attaches to the unit. That is what makes a previous owner's unpaid common expenses a question about the property you are buying rather than a private matter between the corporation and someone who is leaving.
Written by
Robin PatelSalesperson · The Agency Toronto
Updated
Published
Read in your language
A machine translation, not Robin’s words. For anything that decides money, ask him in Gujarati or Hindi directly.
