The lien regime to collect arrears against a defaulting unit owner is straightforward and codified in the Condo Act and common law – there’s a default in common expense payment, a lien arises automatically, a certificate of lien is registered against title to the defaulting unit and then enforcement may take place in the same manner as a mortgage. That culminates in selling the unit via notice of sale if collection is otherwise unsuccessful. This process works because there are avenues to collect and enforce even if the owner flat out ignores the condo’s efforts. So long as the proper notices are given, the condo can proceed absent an owner.
But what can condos do when other condos are in arrears of shared costs and ignore communication and collection?
Every agreement between two corporations is deemed to contain a provision submitting a dispute about the agreement to mediation and arbitration. If a cost-sharing agreement contains a mechanism for mediation and arbitration, hopefully the wording and process is specific enough to permit the appointment of a mediator or arbitrator without the defaulting party’s consent when the defaulting party ignores communications, otherwise the innocent condo may need to go to court to appoint an arbitrator.
However, alongside mediation/arbitration is the separate lien right contained in most cost-sharing agreements. This provision typically applies to the collection of unpaid and quantified shared costs and expenses, plus interest and legal fees. The cost-sharing agreement will usually say that the lien can be enforced in the same manner as a mortgage. If so, the non-defaulting condo has a common law right to possession under the Land Registration Reform Act. This possession will either apply to the entire lands of the defaulting condo or shared or other specified lands, depending on the wording of the cost-sharing agreement.
The cost-sharing lien, operating as a charge, entitles the non-defaulting party to all the legal and equitable rights and remedies that would be available to them as if the defaulting party had transferred the land to them by way of a mortgage (subject to the ability to redeem the land). A mortgage permits a mortgagor quiet possession until default, in which case a mortgagee has a right to possession.
The authority to take a defaulting party’s land then comes from giving a Notice of Sale and making sure it meets minimum redemption requirements. In most cases, the defaulting condo’s lands are occupied, so it will be necessary to go to court for a judgment seeking possession of lands and then a writ of possession. It takes a special kind of condo corporation to default in its obligations so badly, or ignore communications to the extent that protracted legal efforts are required, but it happens.
Depending on the language of the cost-sharing agreement, a notice, caution or other appropriate instrument can be registered on title to the defaulting condo’s property. But even without such a registration, the non-defaulting condo can enforce its lien in the same manner as a mortgage as a common law right. In some cases, enforcing the cost-sharing lien may be faster and more efficient than trying to communicate with or demand payment from an intransigent party. Be sure to check the specific cost-sharing agreement for available remedies.