Construction Lien on Your Home in Ontario: Deadlines and Removal

Finding a construction lien registered against your home is stressful, and so is hearing a contractor threaten to register one. A lien is a claim on the property for unpaid work or materials, and it can get in the way of selling or refinancing.

The Construction Act sets deadlines and a way to clear a lien from title. This article explains the main rules in plain language. It is general information, so check the deadlines against the current statute and talk to a lawyer about your own situation.

The 10 per cent holdback

Under the Construction Act, every payer under a contract or subcontract on which a lien may arise must keep a holdback of 10 per cent.

The holdback exists to create a pool of money that can answer lien claims. How it must be handled in detail depends on the facts of your contract, so confirm the specifics with a lawyer.

The 60-day and 90-day deadlines

A contractor's construction 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.

Preserving the lien is only the first step. A preserved lien also expires unless it is perfected within 90 days.

Which event started the clock, and when, can be disputed. Because the deadlines are strict, check them against the current statute and get advice early.

Removing a registered lien from title

Anyone can get an order vacating a registered lien, without notice, by paying money into court or posting security. That means you do not have to wait for the lien claim to be decided before clearing your title.

The amount is the full amount claimed plus the lesser of $250,000 or 25 per cent of that amount as security for costs. Under s. 44(2), the court may instead accept an amount it considers reasonable.

• The full amount of the lien claim is part of the payment or security.
• An added amount for costs is the lesser of $250,000 or 25 per cent of the claim.
• The court can accept a different amount it considers reasonable.

Buying a new home: the home buyer exception

If you are buying a new home from a builder, you may not be treated as an owner for lien purposes. 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 it is ready for occupancy. Whether you fit the definition depends on your purchase terms, so have a lawyer review them.

What to do next

• Gather your contract, invoices, proof of payments and any written notices from the contractor.
• Note the date the contract was completed, abandoned or terminated, and the date any lien was registered.
• Check the 60-day and 90-day deadlines against the current statute.
• Ask a lawyer whether paying money into court or posting security makes sense for you.
• If you are buying a new home, ask a lawyer whether you are a home buyer.

Frequently asked questions