Edward Brain's Blog

Gerry Hyman has another article for the Toronto Star.  I want to discuss one of the questions as it is an important issue:

QUESTION:  One of the directors of our corporation was seriously behind in his payment of common-expense contributions for his unit. The board, at the last directors’ meeting, voted to extend the time for payment by a further six months. What can be done to make the board to treat this director in the same manner as any other owner who doesn’t pay common expense contributions?

ANSWER:  Your condo corporation has the option of a lien against the unit of an owner who defaults in the payment of his common expense contributions. The lien, however, expires three months after the default which created it. The lien, if not registered within the three months for each default in your situation, will expire three months after each default — notwithstanding the six-month extension for payment that’s been allowed by the board.

The corporation may still sue for the amount of the defaulted common expense contributions, notwithstanding the loss of the lien. But the directors should be made aware that a court may hold them individually responsible for any loss, or increased cost, incurred by the corporation as the result of the loss of the lien due to the board’s failure to register a lien within the required time frame.

Should the court rule that the directors’ failures constitute a failure to act honestly and in good faith, the directors under the Condominium Act will not be entitled to be indemnified in accordance with an indemnification bylaw of the corporation or pursuant to the corporation’s directors and officers liability insurance.

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