How To Resolve or Challenge a Construction Lien in Ontario
Construction liens are a powerful legal tool used in Ontario to make sure contractors, subcontractors, and suppliers get paid for the work or materials they have provided. However, these claims can be contentious for property owners, contractors and others involved in a construction project, especially when the lien is disputed, inaccurate, or unfairly filed. Knowing how to resolve or challenge a construction lien can help protect both your property and your financial interests.
What is a Construction Lien?
Under Ontario’s Construction Act (formerly the Construction Lien Act), anyone who supplies labour or materials to improve a property has the right to register (or deliver) a lien if payment is not received. The lien acts as a claim against the property, meaning it can prevent a sale, refinancing, or transfer until the dispute is resolved.
Although liens are meant to secure payment, not every lien is valid. Some are filed late, inflated in amount, or based on incomplete or defective work. If that happens, there are several ways to challenge a construction lien and clear the property title.
Resolve a Valid Construction Lien by Paying or Discharging It
If the debt is legitimate and the amount claimed is correct, the most straightforward solution is to pay the lien claimant. Once payment is made, the claimant must provide a discharge or release of the lien, which can then be registered to remove the lien from the property title.
Vacating a Construction Lien by Paying Money into Court
Sometimes, an owner disagrees with the lien but still needs it removed quickly from title, for example, to close a sale or obtain financing. In these situations, it is possible to “vacate” the lien by paying the claimed amount, plus a set percentage for potential costs, into the Ontario Superior Court of Justice. The court then issues an order to remove the lien from the property’s title.
The lien no longer attaches to the property but instead to the funds held by the court. Once the underlying dispute is resolved, the court releases those funds to whichever party wins the case.
Challenging a Construction Lien’s Validity
A construction lien can also be challenged directly in court. This process involves asking a judge to discharge the lien because it was improperly filed or is otherwise invalid. There are several reasons why a lien may be set aside.
A lien may be invalid if it was filed after the strict deadlines outlined in the Construction Act. It can also be challenged if the amount claimed is exaggerated or includes costs unrelated to the project. Property owners may dispute liens when the work was defective, incomplete, or performed in breach of contract. In some cases, a subcontractor who has no direct contract with the property owner may have filed the lien incorrectly, giving grounds to have it removed.
Using Ontario’s Adjudication Process
For payment-related disputes, Ontario’s Dispute Adjudication for Construction Contracts (ODACC) offers a faster alternative to court. This process allows an independent adjudicator to make a binding decision about the payment issue. Although the ruling can later be appealed, adjudication often resolves matters much more quickly and cost-effectively than full litigation.
Why Timing Is Key to Challenge a Construction Lien
Strict timelines apply to lien claims in Ontario.
Preserving the lien: A contractor generally has 60 days from the completion of work to register a construction lien against the property's title or deliver a construction lien to the municipal clerk (if the subject improvement is on municipal property).
Perfecting the lien: To maintain the lien, the claimant must commence a lawsuit to enforce it within 90 days after the 60-day preservation period expires.
If these deadlines are missed, the lien automatically expires and can be discharged by court order. Because these deadlines are so important, it is wise to speak with an experienced construction lawyer as soon as a lien is filed or disputed. Acting quickly can protect your rights and prevent unnecessary complications.
If You Need to Challenge a Construction Lien, Contact the Experienced Lawyers at Gionet Fairley Wood LLP for Support
Challenging a construction lien can be complex and time-sensitive. Whether the goal is to have a lien removed, paid out, or vacated, working with a lawyer experienced in construction law can make the process smoother and help ensure the right legal steps are taken.
If a construction lien has been registered against your property in Simcoe, Grey-Bruce, Muskoka, or anywhere in Ontario, the legal team at Gionet Fairley Wood LLP can help you review the claim and determine the best strategy to challenge it. Call us at (705) 468-1088 or visit our website to schedule a consultation and learn more about how we can help you challenge a construction lien efficiently and effectively.
***The information provided in this blog is for general informational purposes only and should not be construed as legal advice. If you have legal questions, we strongly advise you to contact us.