Short answer
A properly preserved condominium lien has statutory priority over most registered and unregistered encumbrances, subject to the Act’s exceptions. That priority is why a mortgage lender may act quickly when notified of condo arrears.
The urgent client problem
The mortgage payments are current, so the owner assumes the lender has no reason to intervene. The condo corporation then notifies the lender that a higher-priority lien is being registered.
What the official rule says
Sections 85 and 86 of the Condominium Act govern the lien, notice to registered encumbrancers and priority. The corporation must notify affected registered encumbrancers, and failure to give required notice can affect priority.
What this rule does not guarantee
The Act does not require every lender to respond identically. Depending on the mortgage contract, a lender may pay the arrears to protect its security, add the amount and expenses to the mortgage debt, demand reimbursement or treat the situation as default.
A practical Ontario example
Illustration only: A first mortgage is perfectly up to date, but $8,000 of condo arrears and costs are secured ahead of it. The lender pays the lien to preserve its position and then requires the borrower to cure the amount under the mortgage terms.
Practical options to explore now
Do not negotiate only with the condo manager after lender notice has gone out. Coordinate the corporation, lender, lawyer and broker, confirm the all-in cure amount, and secure written confirmation that both the lien and any mortgage default are resolved.
Before choosing a solution, confirm
- The exact default, maturity, notice and proposed-sale dates.
- Every mortgage, lien, tax balance, arrears amount and recoverable cost.
- Current realistic property value and conservative net sale proceeds.
- Whether the proposed financing cures the entire title problem.
- The exit from any alternative/B, MIC or private solution.
Rajiv’s broker perspective
The first question is not simply, “Who will lend?” It is, “How much time and equity are actually left, and which solution improves the client’s position after every cost?” Ontario law controls notices, liens and enforcement. Each lender separately decides its underwriting, cure, renewal and payout policy. I would compare the existing-lender remedy, A or alternative/B refinancing, an appropriately structured MIC or private bridge, and a controlled sale. The best option is the one that resolves the whole problem and has a credible next step—not the option with the fastest promise.
Related: Mortgage declined? Start here · Mortgage Knowledge Centre · Updates & Rules Centre
Received an arrears letter, lien or power-of-sale notice?
Do not wait for the next deadline. Send Rajiv the notice, mortgage statement, title debts, property value and the outcome you want. He can prepare a confidential second opinion and compare practical lender routes while your lawyer confirms the legal timeline.
Request an urgent mortgage second opinion Ask for an Ontario mortgage lawyer referral