- When a tenant hires a contractor to build out leased commercial space, a resulting lien for non-payment generally attaches to the tenant's leasehold interest — the tenant's rights under…
- The landlord's own ownership interest isn't always insulated from tenant improvement liens.
Tenant improvement projects — build-outs, renovations, fit-ups — create their own wrinkle in construction lien law. The contractor did the work on real property, but the party who hired them, the tenant, doesn't own the building. Ontario's Construction Act still applies, but understanding exactly whose interest gets liened, and when a landlord's ownership interest can also be pulled in, takes a bit of unpacking.
This article walks through how construction lien rights on leased commercial space work, for contractors doing tenant improvement work and for landlords and tenants who want to understand their exposure.
The Basic Rule: A Lien Attaches to the Interest of the Party Who Ordered the Work
When a tenant hires a contractor to build out leased commercial space, a resulting lien for non-payment generally attaches to the tenant's leasehold interest — the tenant's rights under the lease — rather than automatically reaching the landlord's underlying ownership of the building.
This matters because a leasehold interest is often worth far less than the property itself, which can affect how much a contractor can realistically recover through the lien alone if the tenant doesn't pay.
When a Landlord's Interest Can Also Be at Risk
The landlord's own ownership interest isn't always insulated from tenant improvement liens. Depending on the circumstances, including how involved the landlord was in requiring, approving, or benefiting from the work, a landlord's interest can potentially also become exposed to a lien claim, not just the tenant's leasehold.
Because this depends heavily on the specific facts of the lease and the landlord's role in the project, landlords shouldn't assume they're automatically protected just because the tenant, not the landlord, hired the contractor.
Comparing the Two Scenarios
| Tenant hires contractor independently | Landlord requires, approves, or benefits from the work | |
|---|---|---|
| Primary target of a lien | Tenant's leasehold interest | Potentially both the leasehold interest and the landlord's ownership interest |
| Landlord's practical risk | Generally lower, but not automatically zero | Higher — landlords in this position should take active steps to manage exposure |
| What helps protect the landlord | Clear lease terms, monitoring of tenant contracts | Careful lease drafting, notices, and possibly holdback practices |
Practical Protections for Landlords
Commercial landlords who don't want tenant improvement disputes to reach their ownership interest typically rely on:
- Clear lease language addressing responsibility for tenant improvement costs and lien risk
- Requiring evidence that tenants are paying their contractors, particularly for larger build-outs
- Posting notices where the Construction Act allows it, to help limit the landlord's exposure for work the landlord didn't itself order
- Getting legal advice before agreeing to any arrangement where the landlord is contributing to, requiring, or directly benefiting from tenant improvement work
Practical Considerations for Contractors and Tenants
Contractors doing tenant improvement work should understand upfront that their lien, in most straightforward cases, secures the tenant's leasehold interest, which may be worth considerably less than the building itself. Getting a clear picture of the tenant's financial position before starting work matters more than it might for a project where the property owner is the one paying.
Tenants should recognize that failing to pay a contractor doesn't just create a personal debt — it can result in a lien against their leasehold interest, potentially complicating their own lease, financing, or ability to assign or sublet the space.
Frequently asked questions
If my tenant doesn't pay their contractor, can my building be liened?
It's possible, depending on your level of involvement in requiring, approving, or benefiting from the tenant's improvement work. It isn't automatic just because you own the building, but landlords shouldn't assume they're fully insulated either — the specific facts and lease terms matter.
Do the same 60-day and 90-day lien deadlines apply to leasehold work?
Generally yes. The Construction Act's standard preservation and perfection deadlines apply to leasehold improvement work the same way they apply to other construction projects, though the specific trigger dates depend on the facts. As of mid-2026, verify current deadlines before relying on a specific date.
Should landlords require proof of payment before tenant improvement work is considered complete?
Many commercial landlords build this kind of protection into their leases, since it can help manage exposure to tenant-driven construction disputes. Whether it's the right approach, and how to structure it, is a lease-drafting question worth raising with a lawyer before a project starts.
As a contractor, does it matter whether I contract with the tenant or the landlord?
Yes, significantly. Who you contracted with generally shapes whose interest your lien rights are aimed at, and understanding that upfront, before you start work, helps you assess your real recovery risk on the project.
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