Today I thought that I would share a practical tip about liens with you.
Many boards like to wait until the very last moment to register a lien so they give the owner the most time possible to make payment. This is risky because the lien right expires and delaying may mean the condominium is unable to register a lien before the right expires. As you know, section 85 of the Condominium Act, 1998, states that the lien right expires 3 months after the default if a lien is not registered against the unit (or POTL for common elements condominiums).
The 3 month period set out in the Act isn’t the only deadline you need to be aware of. It is important to note that the electronic registration system used by most lawyers only permits documents to be registered between the hours of 8:30 a.m. and 5:00 p.m. Monday to Friday, excluding holidays. So if you send instructions to lien to the lawyer at 4:55 p.m. on the last day of the month there is a good chance that they may not have time to register it and the condominium will lose the right to register a lien for the oldest arrears.
Here are my suggestions to ensure that you get all of your liens registered within the deadline:
- Ask the condominium’s lawyer how much notice they require to register liens. For some lawyers this will be a day or two, others an hour or two. It is important to know who you are working with.
- Be familiar with the lawyer’s processes. Some lawyers have lien forms that you need to complete before they will register a lien; others don’t. Some will sign the liens on behalf of the board; others will send the liens to the board or manager for signing before they register the liens. Keep these processes in mind when you have units to lien.
- If you have a large number of liens to register in a given month give the lawyer notice earlier so they can prepare accordingly. If my clients are expecting a large number of liens I usually ask them to let me know after they send out the notices of lien. This gives us time to do some of the administrative stuff (i.e. open files, conflict searches) a few days before so that we have less to do when the notice expires.
- Consider sending the notice of lien earlier. Sending the notice earlier means that you can register earlier and avoid the busiest time of the month. Sending it earlier also means you can give the owner more than the 10 days minimum required by the Act.
- Have your file in order. Make sure that you are prepared to give the lawyer instructions to lien. At a minimum, you should tell the lawyer the owner’s address for service, the amount of arrears, and if there are any special circumstances (i.e. arrears are for chargebacks). The lawyer may also want a copy of the notice of lien that was sent to the owner, an accounting statement for the unit, and a copy of the relevant by-laws that outline lien procedures or interest rates.
- Remember holidays. When you are preparing notices of lien don’t forget statutory holidays, especially when they are at the end of the month. For example, in December many offices are short-staffed so don’t wait until 3 p.m. on the 31st to give the lawyer instructions to lien.