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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