- Under Ontario's Construction Act, contractors, subcontractors, and suppliers who aren't paid for work or materials they've supplied to a property can register a lien against it, giving…
- A lien registered against a property is an encumbrance on title.
- A construction lien dispute and a real estate closing don't have to be resolved by the same process or timeline.
You've got a firm closing date, and then a title search turns up something unexpected: a construction lien registered against the property, filed by a contractor or supplier who says they were never fully paid for work done on the home. Now what?
A registered lien doesn't automatically kill a deal, but it does need to be dealt with, because it affects marketable title, and no buyer's lawyer is going to let a closing proceed with an unresolved encumbrance sitting on the parcel register.
Where Construction Liens Come From
Under Ontario's Construction Act, contractors, subcontractors, and suppliers who aren't paid for work or materials they've supplied to a property can register a lien against it, giving them a claim against the land itself as security for the amount owed. This can happen even in situations where the current seller genuinely believed the relevant invoices were settled — disputes over final amounts, holdback releases, or work quality are common triggers.
A lien has to be preserved within a set window after the last supply of services or materials — a 60-day period under the Construction Act as of mid-2026, worth confirming against the current statute if timing is close — and then perfected through a further court step within an additional window, or the lien right is lost. A lien still showing up on title generally means it was preserved and, in many cases, perfected in time. It isn't simply an unenforceable leftover that will disappear on its own.
Why It Blocks a Clean Closing
A lien registered against a property is an encumbrance on title. Left unresolved, it means:
- The seller can't deliver the clear, marketable title the Agreement of Purchase and Sale typically promises
- The buyer's lender won't fund a mortgage against a property with an unresolved lien in place
- The buyer's lawyer has a professional obligation to flag it and won't recommend closing over it
None of this is about punishing the seller — it's simply that a lien is a real legal claim against the land, and it has to be addressed before the property can change hands free and clear.
Options for Clearing a Lien Before or at Closing
| Option | How It Works | When It Fits |
|---|---|---|
| Pay it out | The seller pays the lien claimant the disputed amount, or an agreed settlement, directly, and the lien is discharged | The debt is legitimate, or the seller wants the fastest resolution |
| Negotiate and settle | The seller and the lienholder agree on a reduced or adjusted amount, especially where the claim is disputed | The seller disputes the full amount but wants to close on schedule |
| Post security to vacate the lien | The seller, often through a bond or paying money into court, has the lien removed from title while the underlying dispute continues separately | The seller genuinely disputes the claim and doesn't want the sale held hostage while it's litigated |
| Closing holdback | Sale proceeds sufficient to cover the lien are held back at closing, pending resolution | All parties agree to proceed with the sale itself while the lien issue is worked out |
A construction lien dispute and a real estate closing don't have to be resolved by the same process or timeline. Vacating the lien from title, so the sale can proceed, is a different step from actually resolving who's right about the underlying debt.
What the Seller's Lawyer Typically Does
- Confirms the lien's status — whether it was properly preserved and perfected within the applicable statutory windows, and for what amount
- Reviews the underlying dispute with the seller to understand whether the claim is accepted, disputed, or somewhere in between
- Coordinates with the lienholder, or their lawyer, on payout, settlement, or a bonding-off arrangement
- Works with the buyer's lawyer on timing, so the closing isn't unnecessarily delayed once a resolution path is chosen
- Confirms discharge or vacating is actually registered on title before or at closing, not just verbally agreed to
Frequently asked questions
Can I still sell my house if there's a lien on it?
Yes, but the lien generally has to be paid, settled, or bonded off so title is clear at closing. It's a resolvable problem in most cases, not an automatic deal-breaker, though it can affect timing.
What if I genuinely dispute the amount the contractor is claiming?
You don't necessarily have to pay the full disputed amount just to close on schedule. Posting security to vacate the lien from title is a common approach that lets the sale proceed while the underlying dispute is resolved separately.
Who pays to resolve the lien — me or the buyer?
This is normally the seller's responsibility, since it's the seller's contractor relationship and the seller's obligation to deliver clear title. It's occasionally addressed through negotiation in the agreement, but the default expectation is that it's a seller issue.
How do I find out if there's a lien on my property before I list it?
A title search will reveal any registered liens. It's worth having this done, or asking your lawyer to check, before you list — discovering a lien mid-transaction is far more stressful than knowing about it in advance.
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