Legal

January 9, 2020 Published by Toronto and Area Chapter - By Megan Molloy, Richard Elia

Changes to the Collection Process Post Ching v. CCC 203: Recent Released Decision Directly Impacts Condo Lien Procedure & Costs

From the Winter 2019 issue of the CCI Toronto Condovoice Magazine.

The recently released decision of Mei Ki Ching v. Carleton Condominium Corporation No. 203, 2019 ONSC 4338 ("Ching") is sure to garner a lot of attention going forward as it directly impacts the condo lien procedure and the costs that are normally associated with this process.

The following timeline details the implications of this case, which are unfortunate and place more onerous obligations on condos, and by extension, on unit owners who may already be struggling to pay common expenses, at this pre-lien stage.

In Ching, a couple purchased and resided in a condo unit as their matrimonial home. However, only the husband was registered on title as an owner of the unit (the "Owner"). The couple separated in 2014, and Ching moved out. The Owner continued to reside in the unit. In 2015, Ching properly registered a claim to the matrimonial home on title to the unit, which included notice of her new address (a "DMH"). The Designated Matrimonial Home (DMH) was reflected as a "Notice" on title to the unit. A "Notice" can represent many things besides a claim on title.

In 2017, the Owner defaulted in payment of common expenses to the condominium corporation, and the condo began taking steps to register a lien to secure the arrears. In this case, the DMH Notice was not included in the search for encumbrances on title, and the condo failed to provide notice of the steps taken to perfect and register the lien to Ching, the non-titled spouse. There were likely also many other communications from the condo that were issued to the Owner, but were not copied to Ching.

Despite having registered a valid claim to the matrimonial home, Ching was essentially ignored by the condo throughout the lien process. Issues started after the condo obtained vacant possession of the unit and attempted to list it for sale. Ching had simultaneously obtained an order from the Court in a separate family

law proceeding granting her exclusive possession of the unit, and commenced an action to challenge the validity of the condo's lien and power of sale action. Despite the fact that the condo was considerably invested ($) in the collection process by that point, the Court ruled that the lien was invalid because Ching had not been provided with a copy of the Notice of Lien.

In reaching its decision, the Court seems to have taken the position that searching title to the unit and sending notice of the lien was no big deal – which it isn't. However, relying on Section 22 of the Family Law Act, the Court went on to conclude that Ching, the non-titled spouse, ought to have received a copy of the Notice of Lien, thereby requiring that an in-depth title search take place at an earlier stage than it has previously been required under the Condominium Act, 1998 (the "Act").

According to Section 85(4) of the Act, the Notice of Lien is intended to be a low-cost, mandatory pre-notice, which is issued only to the owner(s) of the unit as registered at the Land Registry Office. There has never previously been any suggestion that an in-depth title search was necessary at the Notice of Lien stage. However, the Court thought otherwise, and in doing so appears to have expanded the notice requirement for all condominium corporations going forward.

While this new search requirement is unlikely to have much impact on the overall costs associated with a lien by the time it is registered, the Ching decision has taken what was supposed to be a low-cost, mandatory pre-notice, and has frontloaded the costs involved in the common expense collection process.

Practice Note: For purposes of cost efficiency, consider using the Notice of Lien as a simultaneous notice to all registered encumbrancers. In this way, if and when the Lien is eventually registered, only a "last instrument" search will be needed for most files.

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this article is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.