Ontario Construction Lien Act FAQs

Ontario Construction Lien Act FAQs

Can I include the interest I’m owed in the amount of my lien?

No. Section 14(2) of the Construction Lien Act says that the lien can’t include interest.  This doesn’t mean, however, that the lawsuit you commence to perfect your lien can’t also include a contractual claim for the interest you are owed.

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Can I “contract out of” the Construction Lien Act by including a provision in my contract with my contractor that it doesn’t apply to me or the project?

Generally, no.  You can put whatever you want (that the other party will agree to) into your contract but that doesn’t necessarily mean that it will be enforceable.   Sections 4 and 5(1) of the Construction Lien Act, when read together, make it pretty much impossible to get out of, or around, the Construction Lien Act.  That said, while you can’t contract out of the Construction Lien Act, you can, as I like to say, contract “on top of” it.  What I mean by this is that, depending on what you want to accomplish, you can sometimes include provisions that add to the parties’ rights or obligations without falling out of conformity with the Construction Lien Act.

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The project my company was working on is located in Toronto but I live in Kitchener-Waterloo and my lawyer is in Ayr. Can the action to perfect my company’s lien be started in Kitchener-Waterloo so it’s more convenient when we have to go to Court?

No. Under the Construction Lien Act (section 53), the action to perfect the lien must be started in the office of the local registrar of the court in the area where the improvement is located.

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If my lien rights expire, do all of my other rights expire with them?

No. Lien rights under the Construction Lien Act are separate from, and in addition to, other (i.e. contractual, trust) rights that a person might have.  Even if your lien rights expire, you can still commence an action to pursue other remedies.  That said, you still have to be careful of the expiry of limitation periods under the Ontario Limitations Act.

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I’m a commercial tenant and I hired a contractor to do some leasehold improvements for me. We had a falling out and my contractor registered a claim for lien and I have to deal with it because the terms of my lease require me to get it off title. The problem is that the contractor’s claimed amount is more than double what I might possibly owe him – do I have to pay the full amount in to Court as security even though the claimed amount is so inflated?

Not necessarily. The Construction Lien Act has provisions (sections 44(2) and 44(5)) to permit reduced security in cases such as this.  The trick is being able to convince the Court that less than the full amount of the claim for lien is both appropriate and fair.  This is one of countless good reasons to create a very good paper trail and confirm things in writing as they unfold.

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I’ve heard that I have 45 days from my last date on site to register a claim for lien. Is that right?

That depends.  There are several possible triggers under the Construction Lien Act that can start the running of the 45 day period within which a claim for lien must be registered to “preserve” your lien. Unless you have a contract with the owner or its agent, the date of last supply can be one of those triggers.  This is a very important and sometimes complicated part of the Construction Lien Act and many a contractor and subcontractor has lost its lien rights because the time to register a lien has expired.

If you are owed money and are considering registering a claim for lien, I would strongly recommend that you promptly consult with a lawyer to discuss your situation and determine when your 45 days begins (or began!) to run.

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I have a claim for lien registered but I think that I might also have a claim for breach of trust. A friend of mine overheard the guy who hired me bragging about how he got a big payment from the owner and was going to buy a new truck with the money. Can I just sue for both in the same claim?

No. You need to start two separate actions – one to perfect your claim for lien and a second to sue for breach of trust.   The Construction Lien Act doesn’t allow you to bring both claims in the same proceeding.

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I’m an owner and I hired a contractor to do some work for me. He demanded that I pay him but he’s over budget and there are serious deficiencies in his work. He’s threatening to put a lien on my property if I don’t pay him. Do I have any choice?

This is a very, very common issue that comes up for all sorts of construction projects.  The short answer is that, yes, you will likely have some options.  What your options are and, more importantly, which of those options is best in the circumstances, requires a detailed assessment of the facts and the contractual arrangement between you and your contractor.

In some cases, for example, where the claim for lien is registered at the end of the project (and assuming that all advances have been made by your lender and you aren’t refinancing or selling anytime soon), you can often simply leave it on title and it doesn’t really cause any problems while you try to resolve your differences with your contractor.  Other times, if the claim for lien is causing problems (i.e. you want to sell the property or your lender or landlord is requiring the claim for lien to be removed from title, etc), you can take advantage of provisions in the Construction Lien Act that allow you to post security (cash, letter of credit, lien bond) with the Court in order to obtain a discharge of the claim for lien from title.  In this case, the security posted with the Court stands in place of the claim for lien against the property, title is cleared, and you can then work things out or proceed with your dispute in an orderly fashion.

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50 thoughts on “Ontario Construction Lien Act FAQs

  1. are contractors entitled to progress payments after achieving substantial performance?

    • We have a contractor that performed substandard, and in some cases dangerous and not to code work. He failed to show up to the job site for a week and when he finally returned he refused to fix major issues. We fired him with most work incomplete and the last 25% of the balance unpaid. He claims that he is going to lien the home for the perceived increase in value of the home, and for work done outside the written contract (which is very clear and signed by both parties). What is my recourse if he puts a lien for 50 000 when the contract clearly states we would owe 8 000 when the work is complete? Am I obliged to give him an opportunity to fix the work he has done as well, despite having no faith in his ability and knowing now he lied about licenses, insurance, and permits?

  2. Can a contractor place a lien even if it is unjustified? Even though his work was incomplete & did damage to property inside the house, he can still do that? I paid him 75% of the agreed payment & said I didn’t want him back out of fear of other damage. There was no written/signed contract but an email to go ahead after email estimate sent.

    This seems unfair. Surely a lien can prove to be unjustified? But how much will it cost me to do that?? Help!

  3. I have a client who recently renovated a 21 unit apartment building, I was contracted to do a small portion of the job. I completed my part of the contract and was paid in full. i received an email from the client this morning asking to sign a certificate of substantial performance, stating I was the contractor on the project. We have never had to deal with these before, so I am not sure what this even means for me. They also have me listed as the contractor for this project and I only did one small portion. Should I sign this form?

    • I don’t have enough information to give you advice to, or not to, sign the certificate but you should take a look at sections 32 and 33 of the Construction Lien Act. Whether you fall under section 32 or section 33 will depend, in part, on whether you contracted directly with the owner or not (section 33 deals with completion – not substantial performance – of subcontracts whereas section 32 deals with substantial performance – not completion – of contracts – not subcontracts). As you can see, this isn’t as straightforward as just deciding to sign or not. I wonder (out loud) whether your client knows what he/she/it is doing in asking you to sign this.

  4. I did a project for a contractor that is renting a commercial unit I have not been paid and lessee has gone AWOL how would I go about putting a lien on the property

  5. I am a General Contractor. We have a subcontractor (SC1)that has subcontracted his work to another subcontractor (SC2) who has completed work and supplied materials on the project. HB has been retained for any paymenst to SB1 from the GC. The material supplier to SB2 is now in a position to lien the project because of payment issues. from (SB1)
    It is my understanding that the supplier would only have access to the Holdback Funds retained from the contract between SB1 and SB2 and not the entire holdbacks retained by the owner from the General Contract.

    Am I understanding the Lien Act correctly?

  6. Hi Adam

    I recently performed a couple months work as a subcontractor for a General
    Contractor. The nature of the work made it impossible to write contracts up for each daily task. Since meeting these fellows, I have had to chase them for money. I was paid for a months worth and now its been 7 weeks since being paid and about 4 weeks since I worked for them. I decided to stop working for them until I get paid. Am I in a position to put a lien on their commercial property (They are a partnership). I also performed work at the home of one of the principals for which I have not been paid.

    Regards Art

  7. Hi Adam,

    We completed a job for a general contractor in a private house. We were very patient in regards to collecting our money. After long wait it turns out the contractor is spending all the money he received form the owner. We finished over 45 days ago. Now the contractor called us and asked us to do some minor repairs.
    If we would go back and finish the repairs, would that give us an extra 45 days to place a lien on the property?
    If so, would an invoice dated over 45 days ago void the new due date for a lien?

    Ben

  8. Hi Adam
    I have done work for a house owner his house was badly done so i had my people going in to fix it we agreed on a price and when it was time to pay he didnt even give me half of the invoice Can i put a lien and how much does it cost to take that kind of procedure. It’s the first time i encouter a client like this one so im not sure of what i can do to get my money

  9. We are a contracting firm and completed a project with a value of approximately $ 140000 for which we have not been paid in full. The customer short paid some of the progress invoices and has not paid the last two invoices. They still owe us $ 72000 + and are not returning our calls. Can I put a lien on the building even though our customer is not the building owner. How much does it cost. we las did work on the site 30 days ago.

  10. Hi Adam,

    I am a homeowner, and I hired an interior design firm to coordinate our bathroom renovation project. The design firm hired a tile setter, and the tile setter botched every aspect of the job, as well as created a significant amount of damage to multiple materials not only in the bathroom, but throughout the house (for example, smeared grout on my vehicle, and made a 3ft scratch across the hardwood floor in a separate room). Unfortunately there were no contracts involved – we did not have one with the design firm nor with any of the sub contractors.

    After discovering the damage, we immediately had other contractors in to quote on repair, and the amount of the repairs exceeded the amount of the tile setters bill (bill was $2200 for labour only, owner supplied all materials). As a result, we did not pay the tile setter. We received a letter from the subs’ lawyer demanding the $2200 in fees + $600 in costs be paid immediately, and it included a lien registered on our property.

    How can I protect myself from this lien?

  11. Hi Adam. I have a contract with a house builder and in recent weeks they have decided not to pay any of the trades for their work. I know a few of the other contractors are putting a lien on the houses. As far as I’ve been told, if one person puts a lien on the house then they can’t sell the house until everyone has been paid. Is this true, and should I look into putting a lien on the house as well or wait for the other companies to settle. I have about 7 days before the 45 days is up. Thx

  12. Hi Adam,
    I need your help.I am a home owner.A door and window company put a lean eventhough I cancelled contract during cooling period.He sued me in small claums court. Judge told him verbally to remove the lean and writr a judgement to pay me $400 on Jan 2013.He did not remove lean.He did not pay me either.

  13. how do I check if there has been a lien placed on my home? by a contractor I didn’t pay because of too many reasons

  14. Hi,

    We were hired by a GC company to perform renovations in the common areas. We completed the majority of our work and are left with some very minor deficiencies. However we have not received our last draw or our hold back.

    They claim that there a major deficiencies involving another contractor. So they are holding back all payment to all the trades.

    We are owed about $70,000. We are coming close to the 45day Window for lien rights. Should we proceed with a contractor lien? And how do we register it?

    Thanks

  15. I am a subcontractor, who hired another sub contractor(1) to do some work the work was unacceptable and had to be redone by another sub(2) that I hired ,there was no interest in fixing the mistakes because quite frankly sub (1)did not have the experience.
    I paid sub (2)in full and now sub (1)has requested money:
    -what are my legal obligations to pay sub (1)
    -what kind of legal recourse does sub (1) have?

    • Hi Camron.

      The short answer is that it will depend largely on two things:

      1. the reasons (factually) for the “unacceptable” work and “mistakes”; and
      2. the terms of your agreement with sub 1.

      On one end of the spectrum, sub 1 could be owed all of the money if the “unacceptable” work or “mistakes” were someone else’s (yours, GC’s, owners, consultant’s) fault/responsibility. On the other end, if the problems were solely the fault of sub 1 and your cost to sub 2 equals or exceeds sub 1’s price, it’s unlikely that sub 1 would have a strong claim to any payment.

      Hope that helps a little.

      Adam

  16. Hi Adam! My father had a contractor do a little work and the contractor provided a written agreement of cost ($10.000) and to complete his work within a month. A week after starting the the job, the contractor informed my family that he had to do work elsewhere and almost six months later the contractor still was not finished but had been paid $8000 dollars. When the contractor was asked for receipts, he got angry and left and later on, got a lien registered against our home for much more than he was owed ($2000) had he completed the job. Subsequently, the contractor got his lien perfected. There was a time when we tried to get the lien transferred to small claims court but the contractor rejected and it still remains in the Construction Lien Courts of Ontario. A few months ago, we had to pay money into court as a security because we wanted to sell our home. Now that the contractor can no longer afford a lawyer, he sent a paralegal to our home serving us with a motion to try to get the lien transferred to small claims court before the lien expires in five months. I am the one trying to help my Dad now and I would like to know what is the best way to challenge the motion to prevent this case from being transferred to small claims? Also, Adam, it would also be appreciated if you would enlighten me with any case law that would help me when I challenge this motion. I thank you and do appreciate any assistance in this matter!

    Yours truly,

    Jane

  17. Hi I am contractor and my question pertains to a dissolved corporations rights and lien rights.

    Basically I filed a lien under my corporation name which is the same name I signed the contract with the client but that corporation was dissolved during the time both that the contract was signed and the time the lien was registered. Now the company has been restored after the fact but the lien is not yet discharged and so I wonder if I have to discharge this lien based on this or not? The reason I ask this info is that when I look at the industry Canada website for reinstating the corporation it says that when the corporation still retains full legalities during the time and after dissolution. Secondly when I registered the lien I also used my personal name just in case this would be a problem and now I am not sure if I can pursue it either scenario even personally as the contract said it was between the contractor “the legal corporation name” and the “clients” where my personal name only shows up as the initials on each page and at the end as the signature under the representation of the corporation. Any help is greatly appreciated as these people waited for me to deliver a tractor trailer full of materials and install steel I beams with a crane all paid for by me right at the peak of the holidays in the winter and then conveniently cancelled the contract on me where I used up my line of credit and can not even afford to hire a lawyer right now yet they are demanding for me to dismiss the lien. Before registering the lien I tried to settle with them by bringing in my invoices from the suppliers and work already done but they shoved it back at me and I believe they have intentionally scammed me.

  18. Hi Adam,
    I recently engaged a person to finish my basement for an agreed labour cost of $ 9500. This included clearing of all debris and finishing the work to my satisfaction. Mt contractor was paid a total of $ 7500 as per the agreed schedule. The balance of $ 2000 was to be paid upon completion of work. Before the work was completed, he demanded additional $1000 or threatened to walk out. I obliged as I was keen to finish the job. During the process of finishing, he could not fix the toilet bowl and washroom sink probably due to lack of plumbing experience. He also could not complete the carpet on the basement stairs accepting his incompetence in that area. He insisted I purchase a new toilet bowl that would be relatively simpler to install and threatened to walk out if I did not comply immediately. I was away to the US at that time. My family could not comply and he did not wait for a single day. He entered my premises without my knowledge and cleared his tools and left the premises. I waited for one week for his return. Since he did not, I accepted the fact that he had abandoned the project. Meanwhile I had to get the job finished by two other contractors who charged me more than the outstanding amount because of the critical nature of the remaining job. Now the original contractor is demanding the balance and is threatening to force a lien on my property. What are my options here? Please guide me.

  19. Hi,

    Thank you in advance for this helpful blog and for answering this question.

    I am a general labourer on the payroll of a company who did some renovation work on a house. I was unhappy with the company and gave my two weeks notice. My boss did not pay me for the last two weeks. He says that I do not have claim rights under the Construction Lien Act because I am an “employee” and not a subcontractor or contractor.

    Is this true? I thought the Act is clear that any person who supplies materials or services to a property is entitled to register a lien.

    Also, he claims that I did not do my job properly and caused damage on the property which is why he is not paying me. But, I was just there for cleanup and am I responsible for any damage or deficiency? (I don’t have an employment contract)

  20. Hello,

    We had a contractor who caused significant delays, did occasioanly sub-standard job (and didn’t do his part in some instances), and had to be begged to come on-site and finish off the work he started way behind the deadline. As we were renting at the time to keep the house vacant, it cost us about two months of extra rent. We want to deduct part of that from the final payment, as it is fair not to pay the full price for the quality of services we received. However, he threatens us with a lien. Do we have any options of re-negotiating the payment terms?

  21. Hello,

    I have a customer who has two contracts with a general. The first contract has been completed however the second cannot commence as the job has
    been delayed over and over. Can he request the holdback from his first job since the delay has been going on for three months now through the lien act or does he have no recourse and must wait for all parts of the job to be completed?
    Thankyou!

  22. Hello
    We hired a design company for our kitchen renovation. They in turn hired a general contractor who in turn hired some workers. One in particular had a falling out with the general contractor, and completed half of the work he was hired to complete. The general contractor has not paid this worker. The worker has now put a lien on our house. Can he do this? We never had a contract with the worker or general contractor. Contract is with design company.

    • Assuming that the worker has a valid lien otherwise (preserved in time, etc), yes. An owner not having a contract with a lien claimant does not protect the owner from otherwise valid liens.

  23. We are building a new custom home and hired a general contractor. It has been almost 4 yrs since the project has begun and in the past year and a half, we have had arguments about the completion dates of the home. I hired a project manager to oversee the work now. The project manager went through the house and provided me with a deficiency list which was sent out to the general contractor. The general contractor has not acted upon the list and has since (May 15, 2013) abandoned the project, taking with him all of out faucets and toilets, permit drawings, other items to finish the house which has a total value of $30,000.00. He has placed a lien as of May 15, 2013 of which it has been over exaggerated 4 times. He claims the last work he performed on the house was May 8, 2013. My question is what right do I have to get my stuff back, how long does he have to perfect the lien and is there anything that you can do to help us.

  24. I am a new contractor and i entered into a contract with a friend who is building a new home. the agreement was 50% of the job paid on start of job the other 50% on completion. I am now 8 weeks into the job without one dollar of money paid to me. I have about 45% of my own money tied up into the job. At this point i just want to be paid what is done and be out the door. My friend is putting me off week by week.
    I would like to file a lien for the work done. i spoke with 2 other trades also on the site and they are also being put off week by week which is why i just want to be paid and done.
    Is this valid, and what steps should i start with. I have just started on my own this past year, and this is my first time filing a lien.

  25. We own a Construction company located in Ottawa. While doing work for one of our customer we found a 300 mm incased (in concrete) pipe that was not in the site drawings provided by the customer. In order to finish installing our services we had to remove this pipe which ended costing us about 13,000.00 extra in labour, equipment and material . Now the customer is refusing to pay and is asking us to send the bill to his surveyor. I need to know what our rights are and If we can put a lien on this property until we get paid.

    Please help !

  26. Hi Adam,
    I was verbally subcontracted by a contractor who does insurance claims for the insurance company.
    upon finishing the job,I was issued a cheque of the total amount due. The next day the contractor called me to tell me that he put a stop on the cheque because my job wasn’t good enough that he had to bring someone else to fix it,also he claims that I made a mess that he had to get it cleaned and thus he is back charging to pay the other subs.
    The job was in the common area of a condo building.
    Can I put a lien on the building?
    Thank you Adam.

  27. What is the process for getting a lien bond (in order to vacate a lien pursuant to section 44 of the CLA)? Do most insurance companies do this regularly, or is it only in specific circumstances. For example, if a labour and materials bond must already have been purchased.

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