Written by: Sara Bahadori
A construction lien is a legal right that allows a party to secure payment for services or materials supplied to improve a property. Governed by Ontario’s Construction Act, RSO 1990, c C.30, a lien attaches to the property itself, creating a legal hold over it until payment is made. This remedy is available to anyone who supplies labour or materials to an improvement—whether it is an individual or a corporation.
But what does this really mean in practice? Here is a breakdown:
- Person: The term includes both individuals and corporations, so whether you are a sole proprietor or running a company, you can register a lien.
- Supplying Services or Materials: You must have actually delivered labour or materials to the project. Promises of future work or deliveries will not qualify. Importantly, you only need to supply either services or materials—not necessarily both.
- Improvement: The work or materials must actually improve the property. If the work does not add value—or worse, diminishes it—you may not have lien rights.
- Owner, Contractor, or Subcontractor: You do not need a direct contract with the property owner to register a lien. If you are a subcontractor hired by a contractor, you can still place a lien on the property.
- Interest in the Property: The lien must attach to the specific property where the work was done. Services or supplies delivered to a different site are considered separate and require separate lien claims.
- Value of the Lien: You can only register a lien for the actual value of materials and labour provided. Exaggerated claims can lead to legal consequences, so accurate record-keeping is crucial.
Who Can Register a Lien?
A wide variety of professionals and tradespeople involved in a construction project can file a lien, including general contractors, subcontractors, engineers, and even material suppliers. The key factor is the nature of the contribution to the project.
Types of Services
Only work that improves the property qualifies. In the event that work need to be repaired or remediated, it would not qualify as a lienable service. Furthermore, services rendered that qualify as maintenance work, such as janitorial services or snow removal, would not qualify as a lienable service.
On the other hand, equipment rental providers can register a lien for the lease of their equipment, even if the equipment is not actually used on the project.
Property Types
Certain properties are exempt and parties are not allowed to place liens on such properties. For example, as of 2019, you cannot place a lien on municipal properties. In such cases, a party must first initiate a Claim for Lien before proceeding further.
Conclusion
Understanding construction liens is essential for anyone involved in the building industry in Ontario. Whether you are a contractor, supplier, or design professional, knowing your rights—and limits—can make a significant difference when seeking payment.
