Can a property owner post security to vacate a construction lien in Ontario?
Yes. Instead of paying cash into court, an owner facing a registered construction lien can typically post security - commonly a lien bond from a surety, or an irrevocable letter of credit - in an amount set to cover the claim (often the lien amount plus an allowance for costs), and obtain a court order vacating the lien from the property's title. This substitutes the security for the property itself as what the lienholder's claim attaches to, freeing up title for a sale, refinancing, or other dealing with the property while the underlying payment dispute continues to be resolved separately.
This is a common and often faster alternative to tying up actual cash, especially for larger commercial projects, since a bond or letter of credit can usually be arranged relatively quickly through a surety company or the owner's bank. The lienholder's claim isn't affected in substance - if they ultimately succeed in proving the debt, they collect against the posted security rather than the property. Because the required amount and the specific court procedure can vary depending on the size and complexity of the lien, this is generally handled through a lawyer familiar with construction lien practice.
Key takeaways
- Posting a lien bond or letter of credit is a common alternative to paying cash into court to vacate a lien.
- The security substitutes for the property as what the lienholder's claim attaches to, freeing up title.
- This lets a sale or refinancing proceed while the underlying payment dispute is resolved separately.
- The lienholder's underlying claim is unaffected in substance - only where the claim attaches changes.