Construction lien (Ontario)

A construction lien is a statutory security: under section 14(1) of Ontario's Construction Act (R.S.O. 1990, c. C.30), "a person who supplies services or materials to an improvement for an owner, contractor or subcontractor, has a lien upon the interest of the owner in the premises improved for the price of those services or materials." It is created by the statute, not by the contract, and it dies unless the lien claimant acts within strict deadlines.

How a lien arises — and expires

The lien arises automatically when services or materials are supplied to the improvement, but section 31(1) says that "unless preserved under section 34, the liens arising from the supply of services or materials to an improvement expire as provided in this section." For a contractor's lien, that expiry is the conclusion of the 60-day period following the earlier of the publication of the certificate of substantial performance and the date the contract is completed, abandoned or terminated (s. 31(2)) — separate windows apply to subcontractors, workers, and suppliers whose work ends before or after substantial performance.

Preserving the lien

Preservation is the first hard step: under section 34(1), a lien is preserved "by the registration in the proper land registry office of a claim for lien on the title of the premises," or — where the lien does not attach to the premises (e.g., Crown or municipal land, railway right-of-way) — by giving a copy of the claim for lien to the prescribed office. The claim for lien must set out the names and addresses of the parties, the period of supply, a description of the services or materials, the contract or subcontract price, the amount claimed, and a description of the premises (s. 34(5)).

Perfecting the lien

Preservation buys time; perfection is what keeps the lien alive. Section 36(2): a lien that has been preserved "expires unless it is perfected prior to the end of the 90-day period next following the last day, under section 31, on which the lien could have been preserved." Section 36(3) defines perfection — for liens that attach to the premises, commencing an action to enforce the lien and registering a certificate of action on title. Even then the clock keeps running: section 37(1) makes a perfected lien "expire immediately after the second anniversary of the commencement of the action" unless a trial order is made or the action is set down for trial by then.

Why procurement teams care

On public construction in Ontario, liens affect payment mechanics everyone else depends on: the holdback regime, substantial-performance certification and publication, and the owner's ability to close out a project. The Act also gives owners a release valve — under section 44(1), a person can move to vacate a registered claim for lien by paying into court (or posting security for) the full amount claimed, plus the lesser of $250,000 or 25% of that amount as security for costs. And liability cuts both ways: section 35(1) exposes anyone who knowingly exaggerates a lien amount, or claims a lien they know they do not have, to damages.

Common questions

Does a construction lien apply to public projects?

The lien regime generally applies to improvements, but Crown-owned premises are a special case: where the owner is the Crown, the lien does not attach to the premises and is preserved by giving a copy of the claim for lien to the prescribed office or ministry (s. 34(3)); municipalities are handled through the municipal clerk (s. 34(3.1)).

What happens if a deadline is missed?

The lien expires and registration comes off title — expiry under the Act does not, however, wipe out ordinary contractual debt claims (s. 38 preserves other legal or equitable rights). The deadlines are unforgiving: 60 days to preserve, 90 days to perfect, two years to set the action down for trial.

Is this the same as the holdback?

No. The holdback is a payment mechanism — a percentage of each progress payment withheld; the lien is a charge on the owner's interest that secures payment. Both exist under the same Act and interact (a lien claimant's recovery draws on the improved premises), but one is money withheld during the project and the other is a registered claim against the land.

Related definitions

Holdback release timing (Ontario) · Substantial performance · Certificate of completion (Ontario) · Retainage vs. holdback