The drywall is finished, the final invoice has gone out, and the general contractor keeps saying the cheque is on its way. For an unpaid trade, this waiting period is exactly when lien rights quietly run out. The Construction Act gives contractors, subcontractors and suppliers a powerful security right against the property they improved, but the right is short-lived and unforgiving. Miss the date and the lien is gone, even when the debt is perfectly valid.
A lien is usually the strongest tool an unpaid trade has because it attaches to the owner’s interest in the land, which gets the attention of owners and lenders in a way an unpaid invoice does not. On a townhouse build in Mount Pleasant or a warehouse fit-out off Steeles Avenue, the deadline could expire while everybody is still being polite.
This article is general information about Ontario’s Construction Act. It is not legal advice, and lien dates depend on your exact contract, your role and the records for the project. Please get a date checked against your own documents before relying on it.
The Two Clocks: Preserve, Then Perfect
A lien must go through two separate stages, and each has its own deadline.
Preservation usually means registering a claim for lien on title to the property in the land registry office. Under section 31, a lien generally expires at the end of a 60-day period, unless it has been preserved.
Perfection means starting a court action to enforce the lien and, where the lien attaches to the land, registering a certificate of action on title. Under section 36, a preserved lien expires unless it is perfected before the end of the 90-day period following the last day on which it could have been preserved.
There is a third stage at the far end. A perfected lien expires after the second anniversary of the action that perfected it unless the action has been set down for trial or an order for trial has been made on or before that anniversary.
Here is a simplified, hypothetical illustration. A contractor’s contract is completed on March 10, with no certificate of substantial performance. Counting 60 days, the last day to preserve would be about May 9, and counting 90 days from there, the last day to perfect would be about August 7. Real files are rarely this tidy, and a lawyer should confirm the count, particularly if a date lands on a weekend or holiday. Treat those dates as outer limits rather than targets, and aim to act well before them.
What Starts the 60 Days
The trigger depends on who you are and what happened on site.
Contractors have a direct contract with the owner. If a certificate or declaration of substantial performance is published, the 60 days for work done up to that certified date generally run from the earlier of the publication date and the date the contract is completed, abandoned or terminated. If there is no certificate, or for services and materials supplied after the certified date, the 60 days generally run from the earlier of the date the contract is completed and the date it is abandoned or terminated.
Subcontractors and suppliers work under someone other than the owner. Their period is more likely to be triggered by events on their own trade, and it runs from the earliest of several events, including the publication of a certificate, the date they last supplied services or materials, the certification of their subcontract as completed, and the date the main contract is completed, abandoned or terminated. In practice, that means a framer who left the job months ago can run out of time well before the project is finished.
A few practical warnings follow from this:
- Returning to fix a deficiency may not extend your date, and a court can look hard at whether a late visit was a real supply of services or an attempt to revive a period.
- Watch for publications. A certificate of substantial performance, once published, is a formal notice, and the party it affects may not personally be told.
- Termination counts. If you were pushed off the job in a dispute, your clock may have begun on that date, not on the day the project wrapped up.
If you have any doubt about the last day, use the earliest plausible date.
Registering the Claim for Lien
Before anything can be registered, you need to know what you are registering against. Pull the parcel register for the property so that you have the correct legal description and the owner’s correct name. A lien naming the wrong owner or attached to the wrong land can create serious problems.
The claim should state the lien claimant and the owner, the person who hired you, the time when services or materials were supplied, a description of them, the contract price and the amount claimed. Registration in Peel Region goes through the land registry system, and it is usually handled by a lawyer since electronic registration has its own requirements.
Different rules apply if the lien does not attach to the land. A lien does not attach to the interest of the Crown or a municipality. So for municipal work in Brampton, the lien is preserved by giving the owner a copy of the claim, rather than registering it on title. It is worth finding out who the owner is early, including whether you are working on a public project.
Claim only what you can support. Section 35 makes a person liable for damages where they know or ought to know that the lien amount has been wilfully exaggerated, or that they do not have a lien at all. Padding a lien with unrelated debts, or with interest and penalties that do not belong in it, invites a counterattack.
Perfecting the Lien
Once you have preserved the lien, the next step is an action in the Superior Court of Justice, which section 50 identifies as the forum for enforcing a lien claim. In Peel, this would typically be started in Brampton. The Small Claims Court cannot do this job, even if the amount owed is small.
Perfection requires a statement of claim and, where the lien attaches to the land, registration of a certificate of action on title. Missing either step creates risk. Note that one party’s action may in some situations assist other claimants, but relying on that without advice is unwise.
Lien actions have their own procedures and can involve several claimants on one project. The court can also deal with related issues such as deficiencies, set-offs and priorities with a lender.
What the Other Side Can Do
Expect a response. An owner or contractor who needs clear title for a mortgage advance or sale may move to vacate the lien. Under section 44, the court must order the lien vacated when the person bringing the motion pays into court, or posts security for, the full amount claimed, plus security for costs equal to the lesser of $250,000 or 25 per cent of the claim. A vacating order takes the lien off title and replaces it with money or a bond, so the claimant may be in a better position to collect, though the dispute continues.
A defendant might also move to have the lien dismissed or declared expired where a deadline was missed, or challenge the amount. Sections 45 to 47 give the court the relevant powers. Keep your supporting records in good shape from the first day, since you may be cross-examined on your claim.
Rights Around the Lien
Liens work alongside other protections. A good claim often uses more than one.
Holdback. Each payer on a contract or subcontract under which a lien may arise must retain 10 per cent of the price of services or materials as they are supplied. The Act has rules on when holdback is released, and it now includes a mandatory annual payment regime for certain contracts: after each anniversary of the contract date, the owner must publish notice and pay accrued holdback subject to the Act’s conditions. Whether and when this applies depends on when the contract was entered into and on transitional rules, so check this against your own contract dates. Owners who release too early or fail to retain holdback may have exposure to lien claimants.
Prompt payment. An owner must generally pay a proper invoice within 28 days of receiving it, unless, within 14 days of receipt, it gives a notice of non-payment in the prescribed form specifying the amount not being paid and all the reasons. A contractor who receives payment must generally pay subcontractors within seven days. Where a contractor gets a notice of non-payment and does not itself get paid, the Act provides a process for notifying subcontractors within the set times. A properly formatted invoice is therefore central to these rights, so look at what your contract says about invoicing.
Trust claims. Amounts owing to or received by a contractor or subcontractor on account of the contract price form a trust for the benefit of those below them who supplied services or materials. Someone who diverts that money, and directors or officers who assent to it, could have personal exposure in the right circumstances. A trust claim is separate from a lien and does not depend on registration, so it can matter when the lien period has passed.
Adjudication. Ontario offers a fast interim dispute process for prescribed issues, such as valuation of work and payment. A notice of adjudication generally cannot be given more than 90 days after the contract is completed, abandoned or terminated, or, for a subcontract, after the earliest of the listed events, including the date the subcontractor last supplied. These adjudication rules have been amended, and which version applies can depend on the date of your contract or of the procedural step. An adjudicator’s decision is binding on an interim basis until a court or an arbitrator decides otherwise or the parties agree on a different result.
Your contract claim. Section 38 confirms that the expiry of a lien does not affect other legal rights. So if the lien has lapsed, you may still be able to sue for the debt, generally within the usual two-year limitation period. You lose the security and the priority, but not necessarily the money.
A Note for Owners and Homeowners
These rules also apply when you hire a contractor for a home renovation. A homeowner who pays the full price without keeping back 10 per cent may be exposed if an unpaid subcontractor later registers a lien. Ask about the holdback before you make your final payment, keep records of what you paid and when, and consider advice before releasing any money after a lien is registered. A lien on your Brampton home can also complicate a sale or refinance, and there are procedures for vacating it and for contesting its validity.
A Monthly Discipline for Contractors
Lien problems are usually record-keeping problems, and a basic system can stop most of them:
- Record the legal owner and property details on day one of every job.
- Keep daily logs that show who was on site, when, and what they did. Your last date of supply may be the most important date in the file.
- Save delivery slips, time sheets, change orders and written instructions.
- Issue invoices that meet the proper invoice requirements and your contract’s rules.
- Diarize a lien review as soon as an account goes past due, without waiting for a final promise of payment.
- Watch construction trade publications for certificates or declarations of substantial performance that may affect your projects.
- Before signing any waiver or release, read what it gives up.
Sooner Rather Than Later
Time is often lost because everyone hopes to protect the working relationship. Understandably, trades worry that registering a lien will hurt them on the next job. A lawyer can help you consider a direct demand, a registered lien, adjudication, a trust claim or a negotiated payment schedule, and can tell you how much room is left on your clock. For more on this area of practice, read the firm’s page on construction and general liens, or use the contact page to reach Sawan Law House LLP with your contract, your invoices and your last date on site. The earlier you bring those three items in, the more options remain open.