By Martin Rumack
Under the Condominium Act,1998 a condominium corporation is granted specific powers in the event that an owner fails to pay his or share of the common expenses. Specifically, section 85 entitles the corporation to a lien against the defaulting owner’s unit, which can be the first step towards instituting power of sale proceedings. The lien expires three months after the owner’s failure to pay, unless the corporation has registered a certificate of lien within that time.
Essentially, the corporation has a deadline or “limitation period” within which that registration must take place, or else it loses its lien-related rights against the unit owner.
The big question is whether government measures relating to COVID-19 have “stopped the clock” on that deadline, for the time being.
On March 17,2020,in response to pandemic outbreak, the Ontario government issued an Order suspending the operation of all legislative limitation periods and all provisions establishing a time-period for “taking a step in a proceeding or intended proceeding”. That government Order was deemed retroactive to March 16,2020,and will last for the duration of the declared state of emergency in the province.
There is some confusion around the scope of this suspension Order, and whether it puts a temporary halt on the three-month period within a lien must be registered under the Act.
In my view, it does not.
I believe the lien deadline remains Intact despite the COVID-19 situation, and that a condominium corporation must still register Its lien for unpaid common expenses within three months of an owner’s default.
My rationale is this: The lien right set up in the Act does not involve a true “limitation period” in the traditional sense, nor does the lien process fall within the usual definition for a “proceeding” or “intended proceeding” as those terms are used in Canadian law. The government’s Order itself did not refer to any sort of “lien” specifically. From a practical perspective there is also nothing to prevent a condominium corporation from registering; land Registry Offices remain open even during the COVID-19 outbreak since they have been designated as an essential service.
Logically, it seems that the Order was merely aimed at addressing the reality that with all Ontario courts being closed until further notice, and with the government mandating social distancing, litigants are unable to start new lawsuits or move their existing ones forward.
To condominium corporations, my advice is this: Pending any government clarification on this issue, corporations should still move quickly to preserve their statutory lien rights against defaulting owners, even against the background of the chaos and uncertainty that the COVID-19 has brought so far. Better to err on the side of caution!
Article Courtesy of:
MARTIN RUMACK, Barrister and Solicitor.
2 St. Clair Avenue East, Suite 202
Toronto, ON, M4T 2T5
Ph: 416-961-3441 (ext 26)