Can a contractor's lien affect the property I am buying in Ontario?
Under Ontario's Construction Act, a contractor, subcontractor, or supplier who has done work or supplied materials to a property and has not been paid can register a construction lien against the title. This lien gives them a legal claim on the property, which can complicate or block a sale.
Construction liens show up on a title search. If one is found on the property you are buying, your lawyer will require the seller to arrange a discharge before closing. The seller can discharge a lien by paying the amount owed, by posting security (such as paying into court), or by negotiating a settlement with the lienor.
As a buyer, you want to ensure there are no outstanding construction liens before you close. This is particularly important if the seller has recently done renovations — work completed within a certain period before closing can still give rise to a lien even if none has been registered yet. Your lawyer accounts for this holdback risk in the closing process.
Key takeaways
- Contractors can register liens against a property for unpaid work or materials.
- Liens must be discharged before you take clean title.
- Recent renovations increase the risk of unregistered liens at closing.
- Your lawyer identifies and requires discharge of any liens found.