Construction Liens Lawyer Serving Ontario, Canada

Under Ontario’s Construction Act, last updated in 2019, a person who supplies services or materials to a construction or renovation is entitled to a lien for the price of the services or materials against the owner of the property. A lien is similar to having a security interest in the project as a guarantee of payment.

Each province has a construction lien statute. Updates to Ontario’s statute in 2019 set strict payment and dispute deadlines and introduced the concept of adjudication to help avoid the cost and time spent in court resolving lien disputes.

If you have a lien claim against a construction project that you need to pursue in Toronto, Ontario, contact Matthew R Harris Law P.C. Liens present several legal challenges. Lawyer Matthew Harris can help assess your situation and help you navigate the legal system to settle the payment dispute. He proudly serves clients in Hamilton, London, Ottawa, and all over Ontario as well.

Understanding Construction Liens

A construction lien is a claim against the owner of the property for payment not received for services or materials. Say a subcontractor is employed to wire a building under construction, but the work is not completed according to specification. The property owner withholds payment until matters are brought up to expectations. The subcontractor objects and files a lien on the property. The owner of the property is then on the hook.

Take this a step further. Say the subcontractor hires two electricians to do the work, but they don’t accomplish it according to specifications. The subcontractor refuses to pay until they complete the work as required. The electricians then file a lien on the property, and the owner is now responsible.

The Lien Process: Preserver and Perfect

The lien claimant must take a couple of steps to complete the lien process. The claimant must preserve and perfect the lien. To preserve the lien means to file the lien with the local land registry office. To perfect the lien means to file a statement of claim with the court requesting a remedy.

The problem for the property owner is that, once the lien appears on the title to the property, a bank can refuse to continue honoring its mortgage disbursements because now it ranks behind the lien claimant in having a security interest in the property.

Changes to the Lien Law in 2019

The 2019 revisions to the Construction Act, formerly known as the Construction Lien Act, expanded the deadline to preserve a lien from 45 days to 60 days “of the publication of substantial performance of the contract or the date the contract is completed or abandoned.” The revisions also increased the deadline to perfect the lien from 45 to 90 days following “the last day the lien could have been preserved.”

The update also set deadlines for payments and the filing of disputes. The owner must pay any invoice within 28 calendar days of receipt or dispute the charge within 14 calendar days, citing the reasons for non-payment. In turn, the contractor has seven days to pay or send a notice of the dispute to subcontractors.

Under the revisions, Ontario also became the first province to offer an adjudication process to help resolve lien disputes, which is administered by the Ontario Dispute Adjudication for Construction Contracts (ODADD) office.

Construction Lien Litigation

If disputes aren’t resolved by negotiation or through adjudication, they can end up in court. The owner may choose to use the court system to get a lien removed from the title to their property, especially if work has been halted because bank funding has been put on hold.

To do so, the owner must pay the court the amount of the lien plus 25 percent of costs. Having paid the lien amount into court, the bank will again be in a first position so that advances can continue, and the owner will still have the opportunity to challenge the lien in court.