A Primer on Construction Liens

A Primer on Construction Liens

James L. McDonald
Posted September 1, 2015 Category: Businesses

In the course of my litigation practice I am often asked to register construction liens and preserve the interest of contractors who have performed work at the request of a property owner.

Generally speaking, if a contractor wishes to preserve his or her rights under Ontario’s Construction Lien Act, a lien must be registered within forty-five days from the last date services or materials were supplied to the “improvement” being undertaken. To maintain reliance on the Construction Lien Act, the registered lien must then be perfected within a further forty-five days by commencing a lawsuit and registering a “Certificate of Action” against title to the property.

While every case has its own particular facts, often times we are able to negotiate a payment and discharge of the lien within the second 45-day period and before an action is commenced. If you are a contractor considering a construction lien or a home owner who has encountered a payment dispute and threat of lien, I would be pleased to discuss the matter further with you.   Understanding your rights and obligations under the Construction Lien Act and more generally is important and can greatly assist in resolution of disputes at an early stage.

In the interim, the following is a primer of sorts and reviews the essential elements of a claim for lien.

  • The supply of services or materials
    • “Supply of Services” is defined by the Construction Lien Act to mean any work done or service performed upon or in respect of an “improvement” and includes the rental of equipment with an operator and, where the planned improvement has not begun, also includes the supply of a design, plan, drawing or specification that in itself enhances the value of the owner’s interest in the land.
    • “Materials” is defined to mean every kind of movable property that becomes or is intended to become part of the improvement or that is used directly in the making of the improvement or used to facilitate directly the making of the improvement. It includes equipment rented without an operator.
  • to an “improvement”
    • “improvement” means, with respect to land, (a) any alteration, addition or repair to the land, or (b) any construction, erection or installation on the land, including the installation of industrial, mechanical, electrical or other equipment on the land or on any building, structure or works on the land that is essential to the normal or intended use of the land, building, structure or works, or (c) the complete or partial demolition or removal of any building, structure or works on the land.
  • for an owner, contractor or subcontractor
    • Owner means any person, including the Crown, having an interest in a premises at whose request and, (a) upon whose credit, or (b) on whose behalf, or (c) with whose privity or consent, or (d) for whose direct benefit, an improvement is made to the premises but does not include a home buyer.
    • Contractor means a person contracting with or employed directly by the owner or an agent of the owner to supply services or materials to an improvement.
    • Subcontractor means a person not contracting with or employed directly by the owner or an agent of the owner but who supplies services or materials to the improvement under an agreement with the contractor or under the contractor with another subcontractor.

In every instance, the following information will be necessary for a lien to the registered:

  1. Claimant: The name and address for service of the person claiming the lien
  2. Owner: The name and address of the owner of the premises
  3. Contracting Party: The name and address of the person for whom the services or materials were supplied
  4. Description: A description of the services/materials supplied and the time within which they were supplied
  5. Contract Price: The contract or subcontract price
  6. Amount Claimed: The amount claimed for the services or materials that have been supplied
  7. Description of Land: A description of the premises sufficient for registration if the lien attaches to the premises, or the address or other identification of the location of the premises where the lien does not attach to the premises.
James L. McDonald
Posted September 1, 2015 Category: Businesses

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