Late Friday night, the Ontario government made an order:
- suspending limitation periods; and
- suspending procedural deadlines, subject to the discretion of the court or tribunal,
in all Ontario legal proceedings (the “Order”). The Order is retroactive to March 16, 2020. This suspension will last for the duration of the provincial state of emergency. In other words, there is now a temporary pause on all limitation periods, as well as all steps that need to be taken in legal proceedings (for example, the deadline to file a defence after being served with a claim is now paused).
There have been quite a few legal blogs written about whether or not the Order extends the time period in which liens can be registered.
In our view, the Order does not have any impact on the time-frame to register a lien. The three month deadline to register a lien still applies. Corporations who fail to register a lien within three months of the date of default risk losing their lien rights. The land registry office has just been declared an essential service, and will remain open.
While some owners may face challenging financial times, condos are not lenders and their budgets and operating funds are not designed to accommodate non-payment from owners for many months at a time. Each of the owners rely on the timely payment of common expenses by all owners. Condos may also face budgetary challenges associated with potential additional costs/measures that may need to be undertaken moving forward.
Careful planning will have to be in order when time comes for next year’s budget. Now is not the time to rush into decisions that may have severe financial repercussions.
Management companies should also be considering their obligations under their management agreements – which likely require that steps be taken to secure liens when an owner is in default. Failure to abide by the terms of these agreements, even with a legal opinion provided to a condo about an extension of the lien period, could result in potential liability for a management company.
Section 37 of the Condominium Act has certain protection for board members who rely on professional opinions. This is not the case with management providers who must look to the terms of their agreements. Managers may wish to seek their own advice before taking steps which may breach the terms of their agreements.
It is now clear that the government is looking at ways to assist owners through property tax deferrals and mortgage payment deferrals. There may even be savings to condos to defer some utility costs. We are all facing challenging and uncertain times. It’s a fluid situation and we suggest resisting the temptation to make quick decisions with consequences we may not fully appreciate until time has passed.
Eggs will be broken and mistakes will be made. Some questions being posed by directors and managers don’t have clear answers; directors should use their best judgment, act reasonably, and recognize that as the facts and circumstances change, so too may the advice and approach.