Construction liens in Ontario Construction liens are legal claims for payment for goods and services supplied in the course of improvement of lands and premises. Their function is to make sure that anyone who worked at a property is able to recover payment for the materials and/or services they provided.
Who has a right to construction liens? The person who is owed money for participating in construction activities and/or in installation of equipment that is essential to the use of property has a right to a lien and is called a lien claimant. These include contractors, subcontractors, equipment suppliers and architects, but do not include those providing small repairs and maintenance. The monetary value recoverable by a lien claimant is equal to the balance owed for the materials and/or services supplied.
What to do if you have not been paid?
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To take advantage of the remedies associated with the construction liens you must take the following two steps.
First, you must preserve the lien by registering your claim against the property in the land registry office within the prescribed time. For contracts that started on or after December 6, 2018, the right to a lien expires the earlier of either 60 days after the publication of a Certificate of Substantial Performance or 60 days after the contract has been completed or abandoned.
Second, the lien must be perfected within 90 days following the last day on which it could have been preserved. To preserve the lien, you must start a legal action against the property owner and register a Certificate of Action on title.
What are the consequences of a construction lien?
Construction liens are registered on title, which means that anyone who wants to obtain information about the property will be notified of the existence of the lien. This may potentially create serious consequences for property owners.
For example, financial institution that extend loans and/or home equity lines of credit may freeze their financing when they become aware of a registered lien on the property. This may create development disruptions and delays. Furthermore, when a property is purchased or sold, the lien is paid off, similarly to a mortgage, before the proceeds of the sale are released to the seller.
What to do if served with a construction lien?
If you are a property owner who has been served with a construction lien claim, removing a lien is important. A lien may be removed in two ways: by either vacating or discharging the lien.
The lien is vacated by removing the registration from the property’s title in exchange for offering a monetary security to the lien claimant, however, the lawsuit associated with the lien continues and must be addressed by the property owner.
The lien is discharged when the parties come to an agreement, which extinguishes the right to a lien.
Malicki Sanchez Law Team is here to help
In Ontario, construction liens are governed by Construction Act, which is technical and requires strict compliance with prescribed deadlines and requirements. Malicki Sanchez Law is experienced in the law of construction liens. Our lawyers are qualified to provide legal advice and assistance should you find yourself exposed to a construction lien or not paid for the services you have provided.
