Important considerations for registering a lien on a condo project

Author: Paul Conrod |

Important considerations for registering a lien on a condo project.jpg

Construction liens are a type of claim in Ontario that is available to those who supply services and materials to construction projects and have not been paid for their work. Construction liens are a powerful tool because they provide the claimant with a security interest in the property on which the project is located. Liens are available to parties working on condominium projects but there are some special considerations when liening these types of projects.

Condominium basics: units and common elements

A condominium often comprises units and common elements. This structure comes into effect upon the registration of the condominium declaration and description.

A unit is typically for the exclusive use of that unit’s owner. For example, in a residential condominium development, the units are typically the dwelling units, storage lockers, and parking spaces. On the other hand, common elements are available for use by all owners and their tenants. In a residential condominium development, common elements often include the lobby, hallways, gym, and exterior landscaped areas. By virtue of owning a unit, each unit owner also owns a proportionate share of the common elements.

If you are considering registering a lien against a condominium development, it is important to determine and understand whether your work was before or after registration of the declaration and description, and whether your work pertained to a unit or the common elements. The construction lien process can be different for each scenario.

Liens for work before registration of the declaration and description

If your work pertains to the construction of the condominium development, rather than an improvement or renovation to an already-constructed unit or common elements, you must act quickly if you are considering registering a lien.

In these circumstances, it is important to preserve your lien before registration of the condominium declaration and description. Once the condominium declaration and description have been registered and title to the units and common elements has been transferred from the developer to the purchasers, a construction lien is likely invalid as against those units.

When a developer is prepared to register the condominium declaration and description, the developer must publish a “notice of intention to register” in a construction trade newspaper (such as the Daily Commercial News) between 5 and 15 business days before the description is submitted for approval under the Condominium Act. This provides potential lien claimants with an opportunity to maintain their lien rights by preserving liens before registration of the condominium’s declaration and description.

Liens for work on a specific condominium unit

If your work is in a specific condominium unit, such as a renovation inside the unit, your lien rights would likely be against the unit where you did the work. In these circumstances, your lien would be preserved in the usual manner by registering it against title to the unit where you did the work and any other associated units, like a parking space or storage locker.

Lien for work on common elements

If your work pertains to any of a condominium’s common elements, your lien should be registered against all of the units in the development to account for each unit’s proportionate share of the common elements. Once a lien is registered against the units, notice of the preservation of the lien must be given to all of the unit owners and to the condominium corporation. This notice must be made in the prescribed form and must include specific information such as the identity of the lien claimant, the amount of the lien claim, and a short description of the services and materials supplied. This process can take some time, so it is important to act quickly to maintain your lien rights.

For questions and advice about construction claims, including for work on condominium projects, please contact any of the lawyers at Construct Legal.