Spotlight on strata governance: Should the strata corporation’s lien be expanded to encompass fines?
April 10, 2018
BY Kevin Zakreski
BCLI is running a public consultation on governance issues for stratas. It is asking for public input into its proposed changes to the Strata Property Act, Strata Property Regulation, and Schedule of Standard Bylaws. For information on how to participate in the consultation please visit the Strata Property Law Project—Phase Two webpage.
This post is part of a series that spotlights issues discussed in the Consultation Paper on Governance Issues for Stratas. To read other posts in the series please click here.
Brief description of the issue
The Strata Property Act allows a strata corporation to “register a lien against an owner’s strata lot” if “the owner fails to pay the strata corporation any of the following with respect to that strata lot”:
- strata fees;
- a special levy;
- a reimbursement of the cost of work referred to in section 85;
- the strata lot’s share of a judgment against the strata corporation.
Registering a lien under this provision allows a strata corporation to secure repayment of amounts owing in any of these four categories against the owner’s strata lot. In addition to the security interest, the legislation gives the strata corporation, through its lien, an enhanced priority position vis-à-vis most of the other creditors that the owner may have. It also gives the strata corporation access to a legislative remedy that allows for the forced sale of the owner’s strata lot to collect the amount owing.
Conspicuous by its absence from this list is the amount of any fines levied due to a contravention of a bylaw. Should a strata corporation be able to secure such amounts by registering a lien against the contravening owner’s strata lot?
Discussion of options for reform
Expanding the scope of the strata corporation’s lien to embrace fines could have a number of advantages. It would be another means to encourage compliance with the bylaws. It would enhance the strata corporation’s ability to ensure compliance with the bylaws. This could have widespread significance for the strata property. Dealing swiftly and decisively with one dispute may stem other disputes before they get out of hand.
But there may be downsides to expanding the scope of the lien. Owners sometimes complain that fines are applied capriciously or maliciously. If these abusive practices were to occur, then having a lien available for enforcement would amplify their ill effects. Also worthy of consideration is the effect that broadening the lien would have on other parties. This proposal would give a strata corporation’s fines priority over the claims of most other creditors of a strata-lot owner. This could have ripple effects.
The committee’s tentative recommendation for reform
The committee was wary of expanding the scope of the lien as contemplated by this issue for reform. In the committee’s view, too many strata corporations have shown themselves to be inconsistent or worse when it comes to dealing with fines. Handing them the power to register a lien for amounts owing with respect to fines would be opening the door to abuses.
The committee tentatively recommends:
The Strata Property Act should continue not to enable a strata corporation to register a lien on an owner’s strata lot for amounts owing with respect to fines.