Construction Lien

A construction lien is a security interest on a property that can be registered on title to the property by anyone who has supplied work or material to improve the property. The lien on the improved property is for the outstanding price owed for the services or materials provided. Registrants are typically builders, contractor, construction sub-contractor and suppliers.

Under Ontario’s Construction Act, a lien first arises and takes effect when a party first supplies services or material to the improvement. The party paying for the services is entitled to holdback or retain 10% of the price of the services or materials until all liens that may be claimed against the holdback have expired, satisfied, or been discharged. Since 2018, there have been changes with respect to the time line for preserving and perfecting a lien.

A lien can be preserved during the supplying of service or material or at any time before it expires, by registering the lien in the proper land registry office on the title of the premises. Any number of persons having liens upon the same premises can bring forward a joint claim for a lien. A party who wishes to preserve a lien will have 60 days to do so starting from the date that a certificate of declaration of the substantial performance of the contract is published, or the date on which the contract is completed, abandoned or terminated.

After an individual preserves a lien, they can then perfect it. However it is important to note that the claiming party will only have 90 days to perfect a lien, after it has been preserved. Among other considerations generally, in order to perfect a lien, the claimant must commence an action to enforce the lien and then register a certificate of action in the prescribed form on the title of the premises. A perfected lien will expire immediately after the second anniversary of the commencement of the action that perfected that lien, with the exception of an order for a trial in which the lien may be enforced.

The province of Ontario issued the Emergency Management and Civil Protection Act on April 9, 2020, which put a hold on limitation and procedural time periods that are retroactive to March 16, 2020. The Attorney General however, lifted the suspension of limitation periods for construction liens, effective as of April 16, 2020.

This means that amount of time a lien claimant had to preserve a lien prior to March 16, 2020, will resume on April 16, 2020. Therefore, if a lien was established on March 16, 2020, the claimant would have 60 days from April 16, 2020 to preserve it.

Have you provided services or materials for improvement of a property for which you have not been paid? If so, contact our Toronto Real Estate and Civil Litigation Lawyer for a free consultation, to discuss how you can protect your interest by registering a line.

Disclaimer: The information in this article is provided as general introductory information and shall not be relied upon as legal advice.

What is a Construction Lien?

Preserving a Lien

Perfecting a Lien

Time Limitation Suspension during COVID-19