- A payer on a contract where a lien may arise must keep a 10 per cent holdback.
- A lien generally expires unless preserved within 60 days and, once preserved, perfected within 90 days.
- Anyone can get a registered lien vacated by paying money into court or posting security.
Finding out that a contractor has registered a construction lien against your home is stressful. A lien shows up on title, and it can get in the way of a sale or a refinancing until it is dealt with.
The Construction Act sets the rules for holdbacks, time limits and removal of liens. This article walks through the main ones so you can understand where you stand and when it makes sense to get legal advice.
What a construction lien is
A construction lien is a claim registered on title over money someone says they are owed in connection with work on a project. Who can register one, and for what, depends on the facts and on the Construction Act, so it is worth confirming with a lawyer. In plain terms, a lien puts a cloud on the property so the claim can be dealt with before the property is sold or refinanced.
A lien is a claim, not a final finding that you owe the money. Whether it is valid, and for how much, may be in dispute, which is why the time limits and removal options matter.
Your holdback duty as an owner
Every payer under a contract or subcontract on which a lien may arise must keep a holdback of 10 per cent. Whether you are the payer on a particular contract depends on who contracted with whom, so it is worth confirming with a lawyer whether this duty is yours.
How the holdback applies to your project depends on your contract and your situation, so it is worth confirming with a lawyer. Whatever the answer, keep records of every payment you make, with the dates and what each payment was for.
Separately, under the Construction Act a home buyer is not an owner. A home buyer is someone who buys an owner's interest in a home where no more than 30% of the price is paid before conveyance and the home is not conveyed until ready for occupancy. A buyer who fits that description is treated differently from an owner under the Act.
Time limits that apply to the lien
- A lien generally expires unless it is preserved within 60 days. That period runs from the earliest of the events listed in s. 31(2), such as the contract being completed, abandoned or terminated.
- A preserved lien also expires unless it is perfected within 90 days.
These deadlines are why the dates of the work, the end of the contract and the registration matter so much. Which date starts the clock can be a point of disagreement, so write down a timeline and bring it to a lawyer if the dates are unclear.
How a lien can be removed from title
Anyone can get an order vacating a registered lien, without notice, by paying into court or posting security. The amount is the full amount claimed plus the lesser of $250,000 or 25 per cent of that amount as security for costs.
Instead of that formula, the court may accept an amount it considers reasonable. What happens to the claim after a lien is vacated depends on your situation, so it is worth confirming the details with a lawyer before you pay or post anything.
| Route | What it involves |
|---|---|
| Pay into court or post security | Full amount claimed plus the lesser of $250,000 or 25 per cent as security for costs |
| Ask the court for a reasonable amount | The court may accept an amount it considers reasonable |
| Let the time limits run | A lien generally expires if not preserved within 60 days or, once preserved, not perfected within 90 days |
What to do next
- Get a copy of the registered lien and note the amount and dates.
- Gather your contract, invoices, proof of payments and any holdback records.
- Build a timeline of when work started, finished or ended.
- Check whether the lien was preserved and perfected within the limits above.
- If you are selling or refinancing, tell your lawyer early so closing is not delayed.
- Speak with a lawyer before paying money into court or posting security.
Frequently asked questions
How much must I hold back from a contractor in Ontario?
Every payer under a contract or subcontract on which a lien may arise must keep a holdback of 10 per cent. Whether you are the payer depends on who contracted with whom, so confirm with a lawyer.
How long does a contractor have to register a lien?
A lien generally expires unless preserved within 60 days, running from the earliest of the events in s. 31(2), such as the contract being completed, abandoned or terminated. A preserved lien must then be perfected within 90 days.
Can I get a lien off my title without paying the contractor directly?
Anyone can get an order vacating a registered lien by paying into court or posting security. The amount is the full amount claimed plus the lesser of $250,000 or 25 per cent as security for costs, though the court may accept a reasonable amount instead.
Does a new-home buyer count as an owner?
Not always. A home buyer is not an owner under the Construction Act if no more than 30% of the price is paid before conveyance and the home is not conveyed until ready for occupancy.
Sources
- Construction Act (e-Laws) — Ontario e-Laws
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a real estate question
Start a file online — flat, published fees, reviewed by a licensed lawyer before a dollar is owed.