Construction Liens in Ontario: Protecting Your Right to Get Paid

When contractors, subcontractors, suppliers, and workers do not get paid for their contributions to an improvement on land in Ontario, the law gives them a powerful remedy: the construction lien. A lien is a charge registered against the title of the property where the work was done. It puts the property owner — and anyone else dealing with that property — on notice that money is owed, and it can ultimately lead to the forced sale of the property to satisfy the debt.

The construction lien regime in Ontario is governed by the Construction Act (formerly the Construction Lien Act, renamed when the legislation was significantly modernized). It is a highly technical area of law. The deadlines for preserving and perfecting a lien are strict, and missing them almost always means losing the lien right permanently.

Who Can Register a Construction Lien?

The Construction Act gives lien rights to a broad range of people who supply services or materials to an "improvement" on land. This includes:

• General contractors — those engaged directly by the property owner.
• Subcontractors — those engaged by a general contractor or another subcontractor rather than by the owner directly.
• Suppliers of materials — companies and individuals who supply building materials incorporated (or to be incorporated) into the improvement.
• Workers — employees who provide labour on the improvement.
• Architects, engineers, and other design professionals — whose services are used in connection with the improvement.

The term "improvement" is defined broadly in the legislation and includes not just new construction but also alterations, additions, capital repairs, demolition, and site preparation. If you are unsure whether your work qualifies, get legal advice before the deadline — not after.

The Holdback: A Built-in Security Fund

One of the central mechanisms of the Construction Act is the statutory holdback. Owners are required by law to retain a percentage (currently set in the legislation — confirm the current rate) of each payment made to their general contractor. General contractors similarly hold back a percentage from subcontractors, and so on down the payment chain.

The holdback exists as a fund against which lien claimants can claim. It is not the owner's money to keep — it is a legislatively mandated security deposit for the benefit of lien claimants. Failing to maintain the holdback can expose an owner or payor to direct liability.

The holdback must be retained for a set period after substantial performance of the contract (a defined term under the Construction Act) to allow lien claimants the opportunity to assert their rights against it. Only after the lien period has expired and any liens have been discharged or vacated can the holdback be released.

The Critical Deadlines: Preserving a Lien

Here is where construction liens become unforgiving. The Construction Act requires a lien to be preserved — registered on title at the land registry office — within specific timeframes that depend on who you are and what happened on the project. These deadlines run from defined trigger events, including:

• The date of last supply of services or materials to the improvement by the lien claimant.
• The date of publication of a certificate of substantial performance (a milestone defined in the legislation).
• The date of abandonment or termination of the contract or subcontract.

The specific deadline periods applicable to your situation depend on your role in the project and the current version of the legislation — which has been updated in recent years. Do not calculate your deadline from general articles like this one. Confirm the applicable period with a construction lawyer as soon as you know you have a payment problem.

What is clear under any version of the rules: the lien preservation deadline is counted in days, not months. If you are not paid, you must act quickly. The Construction Act is not forgiving of parties who wait until they are comfortable with the situation or fully certain they will not be paid. By then, the deadline may have passed.

Preserving the Lien

To preserve a lien, the claimant must register a claim for lien in the appropriate land registry office for the county or district where the land is situated. The claim for lien must contain specific information required by the Construction Act, including the names of the owner and contractor, a description of the land, the amount claimed, and the last date of supply.

A defective claim for lien — one that is missing required information or contains material errors — may be unenforceable. Getting this document right from the start matters.

Perfecting the Lien

Preserving a lien is only step one. To actually pursue the lien through the court system and ultimately obtain payment, the lien claimant must perfect it — that is, commence a court action and register a certificate of action against the land title — within a further defined period after preservation.

If the lien is preserved but not perfected within the required timeframe, it expires automatically and the claimant loses the lien right. Again, the specific deadlines are set out in the Construction Act and depend on the circumstances of the project.

Vacating and Discharging Liens

Property owners and general contractors who want to proceed with a transaction — or simply remove a lien they believe is invalid — can apply to court to vacate the lien by posting security (typically cash or a bond in the amount of the lien plus an amount for costs). Vacating a lien removes it from title and substitutes the security, so litigation continues against the security rather than the property.

An owner who disputes the validity or amount of a lien can also bring a motion to discharge it. Courts have jurisdiction to discharge liens that do not comply with the Construction Act's requirements.

Adjudication: A Faster Alternative

One of the major changes introduced when Ontario modernized the Construction Act was the addition of a prompt payment and adjudication regime. This system allows parties to a construction contract to have payment disputes decided quickly by a private adjudicator, rather than waiting for lien litigation to run its full course.

Adjudication is designed to keep money flowing on construction projects — the decisions are interim but binding, and the losing party must pay while the dispute is finalized through litigation if required. This is a significant development for contractors and subcontractors who previously had to choose between waiting months for payment and the expense of full litigation.

Why Timing Is Everything

The construction lien is a powerful remedy precisely because it affects the property owner's title and ability to sell or mortgage the property. But that power is entirely time-limited. Unlike most civil claims — where the limitation period is measured in years — lien rights expire within weeks or months of the triggering event.

The moment you have reason to believe you will not be paid for work on an improvement in Ontario, you should consult a construction lawyer. The consultation may reveal that you still have time. It may reveal that you do not. Either way, you need to know before the deadline passes — not after.

Frequently asked questions