It’s the Most Difficult Time of the Year… To Commence Collection Proceedings

The holiday season can be a particularly difficult time of year for condominium corporations to coordinate and commence lien proceedings. As it is not uncommon for unit owners, at any time of year, who have failed to make payment of common expenses to approach property management and the Board to explain why that was the case, often with stories that tug at one’s heartstrings and to request some type of leniency or concession, such circumstances may be especially difficult during the holidays, as it is seen to be against the “spirit of the season”.

While it may be difficult not to try to help when a neighbour makes a desperate plea to you in the course of a visit to the Management Office or a chance meeting in the elevator, the position of the condominium corporation cannot be compromised. Notwithstanding the time of year, the Condominium Act, 1998 (the “Act”) provides strict deadlines for condominiums to secure their position in respect of unpaid common expenses. A Condominium Lien must be registered within three (3) months of the initial default and the mandatory Notice of Lien (Form 14) must be issued and expire prior to registration.

Within the Act, it is unclear as to how long a Form 14 will remain valid. The Act only states that the Form 14 must be issued at least 10 days before registering the Condominium Lien against title to the unit. It does not state how long it will remain valid. In balancing the interests of a unit owner against those of a condominium corporation, it is not an uncommon practice to accept a part-payment after issuance of the Form 14 so as to “extend” the deadline for registration of the Condominium Lien. For example, if the Form 14 is issued in regards to three (3) months of common expense arrears, the payment of one month’s common expense was thought to allow the condominium corporation to delay registration by one month – the logic being that the amount secured under the lien will not exceed three (3) months.

Unfortunately, recent case law has made it all that much more difficult for condominiums to be compassionate to owners who find themselves in financial difficulty during the holidays – or at any time of year. In the case of York Condominium Corporation No. 82 v. Bujold, the Ontario Court of Appeal suggested that a Form 14 must be issued in the same month that a Condominium Lien is registered. This means that a condominium corporation providing compassion to an owner in arrears by accepting one month’s payment of common expenses to extend the deadline by which a lien must be registered would be required to re-issue the Form 14 in the following month to protect its interest. The cost associated with such re-issuance then adds to the financial burden placed upon the unit owner who has failed to make payment of common expenses when due.

Having worked on thousands of collection files over the years, our preferred protocols for dealing with the holiday season are no different than the protocols in place for the rest of the year:

Maintain a consistent procedure. In this way, no one has any reason to cry foul, accuse the Board of unequal treatment, et cetera. While it may be more difficult to commence collection proceedings during the holiday season, the same procedure should apply to all units at all times. Expressing to a unit owner in arrears that the protocol applies the same way to everyone and must be carried out to protect the condominium’s interest can help “separate the person from the problem” and clarify that the reason for the non-payment has no affect on matters. As the dynamics of these situations can be difficult for people who must co-exist in community, our office always encourages directors, property managers and others involved in the collection process to direct all inquiries to our office once a file has been transferred to us. This practice ensures that:

• There is a single voice on behalf of the condominium corporation in respect of the collection matter;
• The condominium’s position is secured and consistently applied regardless of relations within the community; and
• Assists in re-directing such inquiries and deflecting possible conflict away from Board members, property management, et cetera.

We will listen to what the unit owner has to say, explain the process provided by the Act and work with the owner to resolve the matter as expeditiously and cost effectively as possible.

Contact us at liens@elia.org for more information.

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

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