Recovering Legal Costs for Debt Collection

WHAT LEGAL COSTS CAN A STRATA RECOVER WHEN IT REGISTERS A LIEN?

A Strata can recover its reasonable legal costs of registering and enforcing a lien (s.118). This means the Strata's actual legal costs incurred both in and out of court, not merely the party-and-party costs a court would award in a lawsuit ([*The Owners, Strata Plan KAS 2428 v. Baettig, 2017 BCCA 377, paras 54–55, 79).

"Reasonable legal costs" is the current wording of the Strata Property Act s.118(a), and the Court of Appeal has held that it captures legal costs incurred both in court and out of court, including the cost of taking out-of-court steps such as registering a lien in the first place (Baettig, 2017 BCCA 377, paras 54–55).

As examples, a Strata is using its "reasonable legal costs" authority when it adds the cost of preparing and registering a Certificate of Lien even though this is not part of a legal proceeding. However, there is an open question if reasonable legal costs includes costs charged by a non-legal individual or organization. For example, we are aware that many property management companies charge a fee for sending a letter to an Owner notifying them of unpaid strata fees or a fee for referring a matter to a law firm - our expectation that this costs would not be recoverable by a Strata if they were challenged.

WHEN DOES A STRATA'S POWER TO RECOVER LIEN COSTS BEGIN?

A Strata's power to recover legal costs under s.118 does not begin until it registers a Certificate of Lien (625536 B.C. Ltd. v. Owners of Strata Plan LMS 4385, 2021 BCCA 158, paras 44, 49). This is a bright line, not a case-by-case inquiry: on the plain language of the Strata Property Act, s.118 only reaches the costs of registering a lien and costs added to a Certificate of Lien, and a Strata has no independent basis to claim legal costs outside that framework (625536 B.C. Ltd., paras 23–24).

However, once the lien is registered, the costs of preparing the notice required before

registration fold in, even though the Strata incurred them before the lien existed (625536 B.C. Ltd., para 29). This bright line reflects a deliberate interpretive choice: the Court of Appeal gave the plain statutory language priority over a purposive argument for reading s.118 more broadly, rejecting the argument that a Strata could recover costs before a lien exists (625536 B.C. Ltd., para 40).

ARE ALL LEGAL COSTS RECOVERABLE, OR ONLY SOME?

Only legal costs that were reasonably necessary to register or enforce the lien are recoverable under s.118 (Baettig, 2017 BCCA 377, para 79). A Strata is entitled to add its actual legal costs to the amount owing, but only to the extent those costs were reasonably necessary — this reasonableness requirement is the safeguard against a Strata sheltering excessive charges under the umbrella of the lien (Baettig, paras 78–80).

In a more recent case, a strata corporation's approach to calculating its lien costs survived a challenge because the owner opposing it did not point to any authority showing the approach was flawed (The Owners, Strata Plan BCS1022 v. 1067192 B.C. Ltd., 2026 BCSC 980, paras 30, 32–34).

CAN A STRATA KEEP RECOVERING COSTS AFTER THE OWNER PAYS?

A Strata cannot keep recovering legal costs under s.118 once the owner has paid and the Strata has accepted the arrears, if those costs are directed solely at recovering fees (The Owners, Strata Plan EPS 7076 v 1186856 B.C. Ltd., 2026 BCSC 148, paras 68–74, 77). Once the debt is paid, the lien ceases to serve any enforcement function, so legal costs no longer have anything left to attach to — legal costs under s.118 are an incident of lien enforcement, not a self-standing debt (The Owners, Strata Plan EPS 7076, para 63).

To permit recovery after payment "would risk reversing the statutory relationship between arrears and costs, making legal fees the primary object of enforcement rather than an incident of it" (The Owners, Strata Plan EPS 7076, paras 68–74).

Our understanding is that this exact scope holding is not yet beyond challenge: the Court of Appeal has granted the Strata leave to appeal this point, on the basis that Baettig does not itself decide whether post-payment fee-recovery costs are recoverable (The Owners, Strata Plan EPS 7076 v. 1186856 B.C. Ltd., 2026 BCCA 248, paras 46–49). Leave to appeal is only a finding that the point is arguable, not a decision on the merits, so the rule stated above remains the law unless and until the Court of Appeal decides otherwise.

HOW IS THE AMOUNT OF THE COSTS DECIDED?

The amount of a Strata's s.118 costs is decided in two stages: the court decides what the Strata is entitled to recover, and the registrar then decides how much of that entitlement is a reasonable amount. Entitlement requires the costs to have been reasonably necessary to register or enforce the lien, and tethered to that purpose rather than becoming an end in themselves (The Owners, Strata Plan EPS 7076, 2026 BCSC 148, para 39); the amount itself is a separate exercise reserved to the

registrar.

However, the costs of the assessment hearing itself are not part of the recoverable s.118 costs. The assessment of a Strata's costs is not itself one of those costs (The Owners, Strata Plan NW 87 v Ajvazi, 2023 BCSC 1462, paras 145, 148, 150). Those assessment costs are normally assessed party-and-party under the ordinary Supreme Court Civil Rules tariff instead (Ajvazi, 2023 BCSC 1462).

Our understanding is that even the division of labour between the court and the registrar is presently under appeal: the Owner in the same litigation has been granted leave to appeal whether "reasonable" should also inform entitlement at the court stage, rather than being left entirely to the registrar's assessment of quantum (The Owners, Strata Plan EPS 7076 v. 1186856 B.C. Ltd., 2026 BCCA 248, paras 37–41). As with the post-payment question above, leave to appeal does not change the law described here; it means a division of the Court of Appeal will scrutinize it.

A STRATA'S POWER TO RECOVER LIEN COSTS IS BROAD BUT NOT UNLIMITED

A Strata's power to recover legal costs on a lien is broader than a court's ordinary costs award. It begins only when a Certificate of Lien is registered, it includes only costs that were reasonably necessary to register or enforce that lien, and it ends when the arrears are paid.

Two of those boundaries are currently before the Court of Appeal on leave granted, so this is an area of the law we are continuing to watch. Understanding the boundaries as they stand today protects a robust and resilient Strata Community from spending on costs it will never recover.