Owners Must Pay the Strata's Legal Expense When They Don't Pay Strata Fees
- Rebekah Southard
- Apr 19
- 5 min read
WHAT LEGAL COSTS CAN A STRATA RECOVER IF THEY NEED TO FILE A LIEN?
A Strata can recover from an Owner the legal costs it pays to collectunpaid strata fees under s. 118 of the Strata Property Act. However, it is not all legal costs - it is the legal costs arising from lien registration and lien enforcement. The Strata Property Act does not authorize recovery of all legal costs that can be accumulated in the process.
In The Owners, Strata Plan EPS 7076 v 1186856 B.C. Ltd., 2026 BCSC 148, the court discussed the analysis required to determine what legal costs are recoverable.
We have a separate article explaining how to file a lien, so that is not discussed in this article.
WHAT DOES THE STRATA PROPERTY ACT ACTUALLY STATE ABOUT RECOVERY OF COSTS FOR A LIEN?
Section 118 of the Strata Property Act states:
“The following costs of registering a lien against an owner’s strata lot under section 116 or enforcing a lien under section 117 may be added to the amount owing to the strata corporation under a Certificate of Lien:
a) Reasonable legal costs;
b) Land title and court registry fees;
c) Other reasonable disbursements.”
This is both restrictive and permissive. It is restrictive because it applies only to costs associated with registering a lien, and it is permissive because such costs “may” be added to the amount owing.
Recovery is therefore not automatic.
WHAT IS THE BROADER CONTEXT OF THE STRATA PROPERTY ACT REGARDING RECOVERY OF COSTS FOR A LIEN?
The limitation contained in s. 118 of the Strata Property Act makes more sense when considered in the broader enforcement scheme established in the Act.
The Act provides several steps required for the recovery of unpaid strata fees:
Written demand for payment (s. 112),
To registration of a lien against the strata lot (s.116),
To enforcement of that lien (s. 117),
To recovery of specific costs associated with those steps (s.118).
Each step in the sequence follows on the previous step; none of the steps operates independently or out of order.
The recovery of specific costs is the final step and can only follow upon the others. It functions as a part of the lien process, not as an independent source of entitlement to legal costs.
WHAT ABOUT LEGAL COSTS FROM BEFORE A LIEN IS REGISTERED?
Because the entitlement to recover legal costs under s. 118 arises only within the lien process, timing is critical.
Legal costs incurred before a lien is registered are not independently recoverable. This includes costs associated with preparing a demand under s. 112 or other efforts to secure payment before the lien is registered. (625536 BC Ltd. v Owners of Strata Plan LMS 4385, 2021 BCCA 158)
Where a lien is ultimately registered, reasonable pre-lien work may be recoverable as part of the costs associated with registration or enforcement. (The Owners, Strata Plan KAS 2428 v. Baettig, 2017 BCCA 377).
The fact that legal costs incurred before the registration of a lien are not recovered from the Owner if they pay the arrears before a lien is filed, should motivate Stratas to continue to progress through the process. We have experiences where a Strata has made a demand for payment of unpaid Strata Fees with a 30 day timeline for those fees to be paid. However, the Strata does not provide instructions to a law firm to file a Certificate of Lien. Then, much later than the deadline imposed by the Strata, the Owner pays the arrears (frequently as part of a foreclosure, sale or refinancing) and because a Certificate of Lien was not filed the Strata cannot recover its legal costs for the demand for payment. If the Strata had continued with the process, it would be entitled to recover those legal costs.
WHAT ANALYSIS WILL A COURT DO TO DECIDE WHAT LEGAL COSTS CAN BE RECOVERED?
The Court, in EPS 7076 outlines a structured approach to determining when legal costs are recoverable under s. 118.
In that case, the Strata registered a lien following the expiry of the notice period given under s. 112. The debtor paid the arrears before any enforcement steps were taken.
The Strata then sought to recover its legal costs under s. 118.
The Court outlined a framework for determination of recovery under s. 118 that proceeds in three stages:
Determination of Entitlement.
The Scope of Recoverable Costs.
Reasonableness.
Stage One: Determination of Entitlement
The first stage is a threshold determination of entitlement, where court determines whether it was reasonable, in principle, for the Strata to incur legal costs for the purpose considered by s. 118.
This is not a review of accounts or an assessment of the amount claimed. It is only an evaluation of whether the Strata is invoking s. 118 for its statutory purpose: to recover the reasonable costs of registering or enforcing a lien so that owners who are not in arrears are not required to subsidize unpaid Strata obligations.
Stage Two: The Scope of Recoverable Costs
The second stage determines whether the legal costs claimed fall within the statutory categories of “registering” or “enforcing” a lien.
In EPS 7076, the court distinguished between two categories of legal costs:
Legal costs incurred in registering the lien and securing payment of arrears. Those costs fell within the type of costs contemplated by s. 118 and were therefore capable of recovery, subject to assessment of reasonableness.
Legal costs incurred after the arrears had been paid and directed solely toward recovering the Strata’s legal costs. Because the underlying debt had been satisfied, those costs no longer related to lien registration or enforcement. They were incurred in pursuit of legal costs alone and were therefore outside the scope of s. 118.
The principle behind this stage is that legal costs must remain incidental to recovery of the underlying debt and cannot become the primary object of enforcement; to permit otherwise could promote escalation through ongoing litigation.
Stage Three: Reasonableness
Once the court determines that entitlement exists and the costs fall within the scope of s. 118, the remaining issue is the amount of legal costs. This is determined by the registrar on an assessment.
At this stage, the analysis shifts from whether the costs are recoverable in principle and reasonably necessary to whether they were reasonable in amount. For example, if a Strata incurred thousands of dollars in legal fees regarding correspondence or getting opinions then it is likely that it would be determined that the Owner did not need to pay these becaues they are not reasonable. A demand letter would reasonably cost around $400, the registration of a lien would reasonably cost around $1,000 including all the registration fees. If a Strata paid significantly more than those amounts to a law firm, we expect that the court would not order that an Owner pay those costs.
STRATAS SHOULD NOT HAVE TO PAY LEGAL FEES TO RECOVER UNPAID STRATA FEES FROM AN OWNER
Stratas must remember that not all legal costs incurred in pursuing arrears will necessarily be recoverable, and that legal work should remain clearly connected to lien registration and enforcement. After issuing a demand under s. 112, Stratas should move promptly to lien registration if the arrears remain unpaid, so that the cost of the demand might be recoverable. Stratas should take particular care to avoid unnecessary legal costs once arrears have been paid.
