In a recent case, YCC No. 82 v. Bujold, the Court of Appeal considered the interpretation of Section 85 of the Condominium Act (the “Act”) and, in particular, the timing requirements under the Act relating to notice of the lien and registration of the lien. Section 85 of the Act provides that a certificate of lien must be registered within three months after the default has occurred and that the Corporation must give written notice of the lien to the owner at least ten days before registration of the certificate. Condo corporations that are not diligently complying with these requirements risk losing their lien rights.
In the Bujold case, the corporation served the owner with a notice of lien on June 22, 2007 relating to arrears of common expenses that had accumulated since December 31, 2006. The lien was registered on September 25, 2007. In 2009, the corporation served a notice of sale, and subsequently brought a motion for summary judgment and an order for possession of the unit.
The trial judge dismissed the corporation’s claim on the basis that the lien had expired, as it was not registered within three months as required by the Act.
The Court of Appeal confirmed that a lien automatically arises upon the date of default and expires three months after the default, unless a certificate of lien is registered. As the certificate of lien was registered on September 25, 2007 the liens that arose before June 25, 2007 had expired. However, as common expenses were payable on the first day of each month, a separate default occurred on July 1, August 1 and September 1 and the liens in respect of those defaults were potentially valid.
The Court then considered whether the notice of lien that was given on June 22, 2007 was sufficient to cover those subsequent liens arising between the date of the notice (June 22, 2007) and the registration date (September 25, 2007). In this case, since the lien for which the Corporation had already given notice had expired, the Court concluded that the notice of the expired lien could not cover subsequent defaults. The Court concluded that in this case, the lien in respect of the defaults occurring on July 1, August 1, and September 1, was not valid, as the condominium corporation did not provide adequate notice of its lien. Had proper notice been given, then all future defaults arising after the date of registration of the lien would be covered by the certificate of lien and no further notice would be required for those future defaults.
This case illustrates the worst-case scenario where Section 85 has not been strictly complied with. Management companies and corporations should put procedures in place to ensure that the timelines set out in the Act are met in order to prevent the corporation from losing its lien rights.