Toronto Construction Lawyers
Construction Liens, Unpaid Contractors and Construction Payment Disputes in Ontario
Construction projects can give rise to disputes involving unpaid invoices, incomplete work, contractual disagreements, construction defects and outstanding payment obligations.
At Capulli Law LLP, we assist contractors, subcontractors, trades, suppliers, property owners and businesses with construction-related legal matters throughout Toronto and the Greater Toronto Area.
Our services include reviewing construction lien rights, advising on unpaid accounts, assisting with construction lien preservation and perfection, addressing construction contract disputes and pursuing appropriate legal remedies.
Ontario construction law imposes strict procedural and timing requirements. Contractors who have not received payment should seek legal advice before relevant deadlines expire.
Construction Liens in Ontario
A construction lien is a statutory remedy that can provide security for certain unpaid amounts arising from services or materials supplied to an improvement of land.
Under Ontario’s Construction Act, persons who supply qualifying services or materials may obtain lien rights if the statutory requirements are satisfied.
A construction lien can affect the title to the property being improved and may provide leverage or security in resolving a payment dispute.
However, not every unpaid contractor automatically has a valid lien. Eligibility depends on the nature of the work, the relevant contractual arrangements, the property involved and compliance with the Act.
Who Can Register a Construction Lien?
Potential lien claimants can include general contractors, subcontractors, trades and material suppliers that provide qualifying services or materials to an improvement.
Examples include electricians, plumbers, HVAC contractors, renovation contractors, drywall installers and other qualifying construction service providers.
The fact that an invoice remains unpaid is not, by itself, sufficient to establish a lien claim. The work or materials must fall within the scope of the legislation, and the claim must satisfy statutory requirements.
Construction Lien Deadlines in Ontario
Ontario construction lien rights are subject to strict deadlines.
For many construction projects governed by the modern provisions of the Construction Act, a lien claimant generally has a 60-day preservation period measured from the applicable statutory triggering event.
However, the triggering event differs depending on whether the claimant is a contractor, subcontractor or other qualifying party and whether events such as publication of substantial performance, completion, abandonment or termination have occurred.
Some older contracts or projects may remain subject to different rules under transitional provisions.
Because the deadline is not necessarily calculated simply by counting days from the last invoice, a proper review of the relevant project history is important.
Who Can Register a Construction Lien?
Potential lien claimants can include general contractors, subcontractors, trades and material suppliers that provide qualifying services or materials to an improvement.
Examples include electricians, plumbers, HVAC contractors, renovation contractors, drywall installers and other qualifying construction service providers.
The fact that an invoice remains unpaid is not, by itself, sufficient to establish a lien claim. The work or materials must fall within the scope of the legislation, and the claim must satisfy statutory requirements.
Construction Lien Deadlines in Ontario
Ontario construction lien rights are subject to strict deadlines.
For many construction projects governed by the modern provisions of the Construction Act, a lien claimant generally has a 60-day preservation period measured from the applicable statutory triggering event.
However, the triggering event differs depending on whether the claimant is a contractor, subcontractor or other qualifying party and whether events such as publication of substantial performance, completion, abandonment or termination have occurred.
Some older contracts or projects may remain subject to different rules under transitional provisions.
Because the deadline is not necessarily calculated simply by counting days from the last invoice, a proper review of the relevant project history is important.
What Happens if the Deadline Is Missed?
If a lien is not properly preserved within the applicable statutory period, the lien right generally expires.
The claimant may still have other legal remedies, including a contractual debt claim or other applicable cause of action, but those remedies are not the same as a construction lien and are subject to their own requirements and limitations.
How to Register a Construction Lien in Ontario
Preserving a construction lien typically involves determining whether lien rights exist and preparing the required statutory documentation.
The process may include the following steps.
Reviewing the Construction Agreement
The lawyer reviews the contract, purchase orders, invoices, change orders and other documentation to determine who contracted with whom, the scope of the work and the amount allegedly owing.
Confirming the Property and Ownership
The relevant lands are identified through title and other records. The lawyer considers whether the claimant’s work relates to the property and what interest may be subject to a lien.
Calculating the Preservation Deadline
The applicable statutory trigger must be established, including relevant certificates, notices and project events.
Preparing the Claim for Lien
The prescribed claim must identify the required parties, property and claimed amount and comply with applicable statutory requirements.
Preserving the Lien
For land governed by ordinary land registration procedures, preservation generally involves registering a claim for lien against title. Certain circumstances require a different process.
The claimant should obtain advice before registration because improper or exaggerated lien claims can create legal exposure.
Preserving Versus Perfecting a Construction Lien
Registering or otherwise preserving a lien is not the final step required to maintain it.
Preservation is the initial statutory process used to prevent the lien from expiring during the applicable preservation period.
Perfection generally requires commencing an action to enforce the lien and, where required, registering a certificate of action.
Under the modern statutory framework, a preserved lien generally must be perfected within 90 days after the last day on which it could have been preserved, subject to applicable legislation and transitional requirements.
Failing to perfect the lien within the required time may result in its expiry.
Preserving the Lien
For land governed by ordinary land registration procedures, preservation generally involves registering a claim for lien against title. Certain circumstances require a different process.
The claimant should obtain advice before registration because improper or exaggerated lien claims can create legal exposure.
Preserving Versus Perfecting a Construction Lien
Registering or otherwise preserving a lien is not the final step required to maintain it.
Preservation is the initial statutory process used to prevent the lien from expiring during the applicable preservation period.
Perfection generally requires commencing an action to enforce the lien and, where required, registering a certificate of action.
Under the modern statutory framework, a preserved lien generally must be perfected within 90 days after the last day on which it could have been preserved, subject to applicable legislation and transitional requirements.
Failing to perfect the lien within the required time may result in its expiry.
Unpaid Contractor Invoices
Contractors often contact a lawyer after performing work and receiving only partial payment or no payment at all.
The available remedies depend on the construction contract, the work performed, applicable legislation and the reasons given for non-payment.
Reviewing the Contractual Payment Obligations
A lawyer may examine the contract price, payment schedule, invoices, change orders, deficiencies alleged by the owner and any contractual provisions concerning withholding payment.
Demand Letters
A formal demand letter may identify the outstanding balance, contractual basis for payment, supporting documentation and the consequences of continued non-payment.
A demand letter does not itself preserve construction lien rights.
Negotiation and Settlement
Some disputes can be resolved through payment agreements, negotiated settlements or other commercial arrangements without contested litigation.
Construction Liens and Litigation
Where legally available, a lien may secure certain payment claims. Depending on the circumstances, an action for debt, breach of contract or another legal remedy may also be appropriate.
Ontario’s construction adjudication regime may provide an additional avenue for certain disputes within its statutory scope.
Construction Contract Disputes
Construction disagreements may concern whether work was completed, whether extras were authorized or whether a contractor complied with contractual obligations.
Extra Work and Change Orders
Additional work can lead to disputes when the parties disagree about whether the work was included in the original price or whether an increased price was authorized.
Written change orders and detailed communication can provide important evidence.
Construction Liens and Litigation
Where legally available, a lien may secure certain payment claims. Depending on the circumstances, an action for debt, breach of contract or another legal remedy may also be appropriate.
Ontario’s construction adjudication regime may provide an additional avenue for certain disputes within its statutory scope.
Construction Contract Disputes
Construction disagreements may concern whether work was completed, whether extras were authorized or whether a contractor complied with contractual obligations.
Extra Work and Change Orders
Additional work can lead to disputes when the parties disagree about whether the work was included in the original price or whether an increased price was authorized.
Written change orders and detailed communication can provide important evidence.
Deficient or Incomplete Work
Owners may allege that a contractor performed defective work or failed to complete the project.
A contractor may dispute these allegations or assert that payment was improperly withheld.
The legal analysis may involve contract interpretation, evidence of the work completed and expert evidence where necessary.
Contract Termination
Early termination can raise questions concerning payment for completed work, deposits, deficiencies, materials, loss of profit and contractual termination provisions.
The parties’ rights depend on the contract and applicable law.
Construction Lien Removal and Discharge
Construction liens may interfere with financing, refinancing or the sale of property.
A property owner affected by a lien may have several options depending on the circumstances.
These may include negotiating a discharge, challenging the lien, seeking a court order or applying to vacate the lien through appropriate security.
Providing security to vacate a lien is not necessarily the same as resolving the underlying payment claim. The dispute may continue even after the lien is removed from title.
Frequently Asked Questions
How long do I have to register a construction lien in Ontario?
For many projects governed by the modern Construction Act provisions, the general preservation period is 60 days from the applicable statutory triggering event.
The trigger is fact-specific and may depend on the claimant’s position in the construction chain and events affecting the contract or subcontract. Older projects may be governed by transitional provisions.
Do not assume that the deadline always runs from your last day of work.
Can I register a construction lien without a written contract?
Potentially, yes. A written contract is not always a prerequisite for construction lien rights.
The claimant must still establish the relevant contractual or sub-contractual relationship, the qualifying supply of services or materials and compliance with statutory requirements.
Can I register a lien after the property has been sold?
The sale of the property does not, by itself, provide a universal answer.
The availability of a lien remedy depends on whether the lien was properly preserved, whether it expired, the land registration history and the applicable provisions of the Construction Act.
A claimant should obtain immediate advice because transferring ownership can complicate enforcement and does not extend statutory deadlines.
Can a subcontractor lien a property if the general contractor has not paid?
A qualifying subcontractor may have lien rights even if the owner has paid the general contractor.
However, the amount recoverable through a lien can be affected by statutory limits, holdbacks and the relationships among the parties.
What is the difference between preserving and perfecting a lien?
Preserving a lien is the initial step required to maintain the statutory security right. Perfecting it involves taking the required enforcement steps within the statutory perfection period.
Both requirements are important. Preservation alone does not indefinitely maintain a lien.
What happens if I miss the construction lien deadline?
The statutory lien right may be lost. Other remedies, such as a claim for an unpaid contractual debt, may remain available depending on the circumstances and applicable limitation periods.
Contact a Toronto Construction Lien Lawyer
If your company has completed construction work and has not been paid, prompt legal advice may help you determine whether lien rights or other remedies remain available.
Contact Capulli Law LLP to discuss your construction payment dispute.