Registering a Wrongful or Exaggerated Construction Lien in Ontario: What It Costs You

A construction lien is a powerful tool — it can tie up a property until a dispute is resolved. That power cuts both ways. Registering a wrongful construction lien, one that isn't valid, or claiming an amount well beyond what's actually owed, can expose the person who registered it to real consequences under Ontario's Construction Act, from having the lien struck off title to being on the hook for the other side's damages.

This article explains what makes a lien wrongful or exaggerated, what it can cost the person who registered it, and how a property owner facing one should respond.

What Makes a Lien "Wrongful" or "Exaggerated"

A lien can run into trouble in more than one way:

• No valid basis at all — registering a lien when you were never actually owed money for services or materials supplied to the improvement
• Exaggerated amount — registering a lien for significantly more than what's genuinely owed, whether through error or an attempt to apply pressure
• Missed deadlines — registering, or trying to perfect, a lien outside the strict preservation and perfection windows the Construction Act sets

Each of these can lead a court to discharge the lien from title, but an exaggerated or bad-faith claim can go further, exposing the person who registered it to liability for the harm it caused.

Consequences for the Person Who Registered It

Registering a wrongful or exaggerated lien isn't a free swing. Depending on the circumstances, consequences can include:

1. The lien being vacated, or removed, from title by court order, often on an urgent basis if it's blocking a closing or refinancing.
2. Liability for damages the property owner suffered because of the lien — for example, costs from a delayed or collapsed sale, or the expense of posting security to get the lien off title.
3. Exposure for legal costs connected to fighting the invalid claim, at the court's discretion.
4. Reputational cost within the local construction industry, since owners and general contractors take note of who registers claims that don't hold up.

None of this means every lien that turns out to be wrong on the merits was "wrongful" in this stricter sense — genuine, good-faith disputes about the amount owed happen constantly in construction and don't automatically expose a claimant to these consequences. The risk is specifically for liens that were exaggerated, baseless, or registered without a proper basis.

How a Property Owner Should Respond

If you're an owner facing a lien you believe is invalid or inflated:

• [ ] Get the lien and the underlying contract reviewed by a lawyer quickly — timing matters, especially if a sale or refinancing is at risk
• [ ] Consider whether the lien can be vacated from title, typically by posting adequate security or paying an appropriate amount into court, which can let a transaction proceed while the underlying dispute is resolved separately
• [ ] Gather documentation showing the actual value of work performed or materials supplied, if the dispute is about the amount rather than whether anything is owed at all
• [ ] Decide whether to pursue the lien claimant for damages if the claim turns out to have been genuinely wrongful or exaggerated, rather than simply mistaken

Frequently asked questions