Condominium Dwellers Beware: Liens by contractors for unpaid work done on common elements
by Sophie Petrillo
Although most people think of residential condominiums to be high-rise apartment dwellings, this is not always the case. Even townhouses or detached homes can be condominiums. What makes them "condominiums" is the manner in which the owners have agreed to share the ownership and maintenance of the common property while still maintaining the individual ownership of their units.
A condominium complex is made up of two distinct components. The first component consists of the individual units of living space within the finished walls of the condominium which are generally owned by individuals. The second component consists of the "common elements" including the areas such as the hallways, elevators, pools, septic system, land, parking garage, recreational facilities, exterior walls of the building, etc., which are owned by all of the unit owners jointly. The division of ownership is normally set out in the condominium corporation's declaration and/or bylaws. Accordingly, each condominium unit owner owns his/her own unit and a percentage interest in the "common elements". A condominium corporation is essential for maintaining, administrating and regulating the "common elements".
In certain cases, repairs will need to be made to a condominium, at which point the condominium corporation may retain a contractor to perform the work. Condominium dwellers should be weary when contractors are hired to work on the "common elements" since the contractor is entitled to register a Claim for Lien under the Construction Lien Act against all of the units and the "common elements" if the contractor does not get paid for its work.
Subsection 23(5) of the Condominium Act provides that a condominium corporation, as representative of the individual unit owners, may be sued in respect of any matter relating to the "common elements" or assets of the condominium corporation. If a contractor is successful in obtaining Judgment against the condominium corporation, a Judgment for the payment of money against the condominium corporation is also a Judgment against each of the unit owners at the time of the Judgment and each unit owner is responsible for paying a portion of the Judgment in accordance with the percentage set out in the declaration for sharing ownership of the "common elements" pursuant to Subsection 23(6) of the Condominium Act.
Once the contractor has obtained Judgment, it is then entitled to file a Writ of Seizure and Sale with the Sheriff's office in order to enforce its Judgment. The contractor will normally include the names of all of the condominium unit owners in the Writ of Seizure and Sale. This will prevent each unit owner from selling or refinancing his or her unit until his or her proportionate share of the Judgment has been fully paid to the contractor. It is important to note that even though a unit owner discharges his or her proportionate share of a Judgment by paying the contractor its share of the Judgment, the condominium corporation may still levy a special assessment against the unit owner(s) to cover the indebtedness. In order to prevent a unit owner from being in jeopardy of having to pay twice, he/she should obtain a release from the condominium corporation simultaneously when the payment is being made to the contractor.
In the unreported decision of Master Sandler in S.S.T. Contractors Ltd. v. York Condominium Corporation No. 25 (21 February 2005, Toronto, 03-CV-243855 (On S.C.)), a contractor registered a Claim for Lien under the Construction Lien Act on title to the entire condominium complex including the "common elements" and every individual condominium unit in respect of unpaid repairs made to the parking garage of the complex. The contractor was successful at trial in establishing that it had a valid lien. Master Sandler awarded the contractor Judgment against both the condominium corporation and all of the unit owners. Since the condominium corporation failed to satisfy the Judgment, the contractor pursued each and every unit owner until his or her proportionate share of the Judgment was paid. Both the lien and Writ of Seizure and Sale put the contractor in a position where it could sell the units in order to get paid in respect of its Judgment, if necessary.
Ignorance of the law is no defence. As a unit owner, even if you know nothing about the work being done to the "common elements" of the condominium, you will still be liable in the event that the condominium corporation does not pay its indebtedness to the contractor. As a protective measure, it is prudent to become actively involved in the condominium corporation and to choose the directors of the condominium corporation wisely. To do otherwise may put you at risk of having to pay the corporation's debts above and beyond all of your monthly maintenance fees to the condominium corporation.