Three Trades, One Insolvent Builder: Coordinating Liens in Midland

The situation

Chantal and Rejean built their drywall and painting business slowly. Chantal had spent years working as a personal support worker before the couple decided to go out on their own, taking on residential jobs around Midland one at a time until the business could support them both. By the time a general contractor hired them for the drywall, taping and painting package on a six-unit residential build, it was the largest contract they had ever signed: roughly $28,000 for their portion of the work.

The job went smoothly for the first few months. Chantal and Rejean submitted invoices as milestones were completed, and payments came in, though a little slower each time. Then the payments stopped altogether. Two invoices, totalling about $19,000, sat unpaid. When Rejean called the contractor's office, the calls stopped being returned. A supplier they knew mentioned that other trades on the same project were having the same problem.

One of those trades was Nadia, who ran a small electrical subcontracting business and was owed roughly $14,000 for wiring rough-in work on the same six units. Nadia's partner worked as an early childhood educator, and that second income was the only thing keeping their household steady while the business waited on a payment that showed no sign of coming. Within a few weeks, word around the project was that the general contractor was in serious financial trouble and might not finish the build at all.

For Chantal and Rejean, the $19,000 gap was not an abstract number on an invoice. It was the difference between ordering the next round of materials on account with their usual supplier and having to pay cash up front for every job that came after this one, at a time of year when residential work was already slowing down. Rejean had started keeping a running list of every unanswered call and text, unsure whether it would matter but unwilling to let the record disappear if it did.

The legal problem

Chantal and Rejean had no direct contract with the property owner who commissioned the building; their contract was with the general contractor, who had gone quiet. In Ontario, unpaid subcontractors in that position are not without options. The Construction Act gives contractors and subcontractors who supply labour or materials to an improvement the right to register a construction lien against the title of the property itself, even without a direct contract with the owner. But that right comes with strict, unforgiving deadlines, and once they expire, they cannot be revived.

A lien has to be preserved, meaning registered on title, within a set window that runs from the earliest of a small number of trigger dates, and which dates apply depends on where the claimant sits on the project. A general contractor's window runs from the earliest of publication of a certificate of substantial performance for the contract, or the completion, abandonment, or termination of the contract. A subcontractor's window can also run from the earliest of its own last day of supplying services or materials, the completion or abandonment of its own subcontract, publication of a certificate of substantial performance if its work was captured by that certificate, or the termination of the general contract itself. For a subcontractor still actively working, last supply is usually the date that ends up controlling, but it is never safe to assume that in advance without checking whether a certificate of substantial performance has already been published for the project, or whether the general contract has been terminated outright, since either can start the clock earlier than a trade expects. If that window is missed, the lien right is gone permanently, regardless of how legitimate the debt is. Once preserved, a lien then has to be perfected within a further deadline, which means starting a court action and registering a certificate of action on title. Miss that second deadline and the preserved lien expires too.

There was a second complication. Ontario law requires owners and contractors to hold back a percentage of the contract price on every construction project, specifically to protect subcontractors in exactly this situation. That holdback fund is where lien claims ultimately get paid from, but it is finite. If several trades are chasing the same limited holdback, and one moves faster or louder than the others, the ones who wait can find there is little left by the time they act. With the general contractor's financial trouble becoming public and a mortgage lender also holding registered security against the property, Chantal and Rejean were racing against both a legal deadline and a shrinking pool of money.

The mortgage lender's presence added a further wrinkle worth understanding rather than fearing. A registered mortgage does not automatically defeat a construction lien claimed for work that improved the property, but priority between a lien and a mortgage can turn on technical questions about timing and the mortgage's own advances, which is exactly the kind of issue that rewards getting a lien properly preserved and perfected early rather than treating the deadlines as a formality to get to eventually.

What we did

1. Confirmed the deadline before anything else. The first call established when Chantal and Rejean last supplied services, whether a certificate of substantial performance had already been published for the general contract, and whether the general contract itself had been terminated, since any of those dates can start the countdown and the earliest one governs. Ontario's Construction Act gives no grace period and no discretion to revive a lien preserved even one day late, so we verified both dates against invoices, site records and the public registry rather than take memory at face value.
2. Registered the lien against the property. We prepared and registered a construction lien on title for the full amount owing, plus the modest costs the Construction Act allows a claimant to add. Registering the lien puts the world, including the mortgage lender, on notice that Chantal and Rejean's business has a claim against the property. That mattered even though the couple had no direct contract with the owner — a lien attaches to the land itself, not to whoever holds the purse strings, which is what gives a subcontractor real leverage against a contractor who has gone quiet.
3. Reached out to Nadia's business the same week. Once it was clear other trades were affected, we contacted Nadia to coordinate rather than compete. Multiple lien claimants drawing on the same holdback are far better served comparing notes than moving in isolation, since a shared understanding of who is owed what, and when everyone's deadlines fall, avoids a scramble that benefits no one but the insolvent contractor. It also meant neither business was guessing how much of the holdback might already be spoken for.
4. Perfected the lien by starting a Small Claims Court action. Because the amount owing fell within the Small Claims Court's monetary jurisdiction, we started the action there rather than in the Superior Court, keeping the process faster and less costly than a full lien action would otherwise be. A certificate of action was registered on title within the required window to keep the lien alive. Choosing the smaller court was deliberate: for a claim this size, the extra cost of a full Superior Court process would have eaten into any recovery without improving the odds of collecting it.
5. Pressed the owner and the holdback directly. With the lien perfected, we corresponded directly with the property owner and their lawyer, setting out the holdback obligation and Chantal and Rejean's claim against it. We did the same on Nadia's file, so the owner was dealing with a coordinated, clearly documented position from both trades rather than piecemeal demands. A property owner facing one organized claim covering two trades has less room to play claimants off each other, or to quietly favour whichever one complains loudest, than an owner fielding separate, uncoordinated letters.
6. Negotiated a proportional settlement from the holdback. Once it was clear the general contractor would not be paying anyone directly, the realistic path to recovery was the holdback fund itself. We negotiated with the owner's lawyer for both files together, which avoided a costly race to judgment and got money moving months sooner than a contested trial would have allowed. Settling both files together also meant the owner only had to negotiate the shape of the payout once, which removed any incentive to stall one trade while quietly closing out the other.

The outcome

Chantal and Rejean recovered the full $19,000 they were owed, paid out of the holdback fund a few months after the lien was registered, without needing to take the Small Claims Court action to trial. Nadia's business recovered the full $14,000 it was owed on the same timeline. Both businesses also collected the modest lien costs the Construction Act allowed them to add, and both avoided the far worse outcome of an expired lien and an unenforceable debt against an insolvent contractor with nothing left to collect from directly.

The coordination mattered as much as the paperwork. Acting together meant the owner faced two organized, properly perfected claims instead of a disorganized scramble among several trades, and it meant Chantal and Rejean's business was never at risk of being pushed to the back of the line by a faster-moving lienholder. For a small business running on tight margins, getting paid within months rather than waiting through a drawn-out insolvency process made the difference between absorbing a setback and facing a much deeper cash-flow crisis.

Rejean's list of unanswered calls ended up mattering more than he expected when he started keeping it. It became part of the evidence supporting the timeline of last-supplied services that anchored the lien deadline, turning what had felt like a frustrated habit into something concrete the file could actually use. For a small business with no in-house record-keeping system, that simple discipline of writing things down as they happened, rather than trying to reconstruct them months later, was as much a part of the recovery as the lien itself.

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