Note: The rules and law may have changed since this article was first published. It is provided for archival purposes but you should consult with your lawyer for the current state of the law
One advantage of condominium living is shared responsibility among unit owners for costs of maintaining the complex. It is a common cost, for example, to repair a roof. Shared cost brings some comfort to unit owners that common property maintenance will be paid for.
Like most things in life, things do not always operate perfectly. While all owners are supposed to share in the cost of maintenance this is sometimes not achieved in practice. An owner might fall behind in paying their share of the common costs through their monthly condominium fees. It can be unfair to other unit owners when a fellow resident is in arrears. All owners are expected to pay their share. A defaulting owner is enjoying the benefits of the complex at the expense of fellow residents.
Saskatchewan’s Condominium Property Act, 1993 gives the condominium corporation special powers to handle a defaulting unit owner. The corporation can register a lien for the arrears against title to the defaulting owner’s unit. Registering a lien against title is a powerful tool in getting the arrears paid. If the unit owner wants to sell the unit a purchaser will almost certainly require clear title. This forces the unit owner to allocate sufficient proceeds from the sale to pay the lien in full.
In many cases, however, when the condominium corporation tries to register a lien for fee arrears there are already registrations on the unit owner’s title. Rare is the purchaser who does not need a mortgage to buy a unit so there often is a mortgage already registered on title.
The Act tries to handle this possibility. So long as the condominium corporation follows the prescribed method for providing notice to other interest holders already on title, the corporation’s lien takes priority over all other interests (with some exceptions, such as property taxes). This is important for two reasons. If there is a sale the condominium fee lien will be paid first, in full, before the mortgage. Second, whether or not a sale is in the offing, the threat of the lien being paid first may motivate the mortgage lender to pay the lien to preserve its priority status on title. This often results in faster payment of the lien rather than waiting for a sale by the unit owner.
If a voluntary payment by the unit owner or the mortgage holder does not occur, the condominium corporation may foreclose on a lien. This is similar to what a mortgagee can do if there is default under a mortgage. This can be the most powerful use of the lien because the condominium corporation can obtain title to the unit or have the unit sold to satisfy the arrears. Saskatchewan’s foreclosure process can be a long road with numerous steps in the court system before title is obtained or the property sold. However, once the foreclosure process is started the unit owner must deal with it to avoid forcibly losing his or her unit. Foreclosure on a lien usually engages the unit owner to deal with the lien, perhaps through re-financing or a voluntary sale. In other instances, it motivates parties with registered interests, such as a mortgage lender, to pay the arrears to preserve their interest in the unit. In most cases the condominium corporation does not have to go through the time and expense of the entire foreclosure process. Results are usually achieved earlier in the process.
It’s unfortunate that a condominium corporation might have to incur the expense of these extreme steps. Thankfully they are relatively rare. But at least the Act does provide a process rather than simply wait for an indefinite period.