If you’re a property owner or contractor in Ontario, dealing with a construction lien can be a complex and challenging process. Construction liens, also known as builder’s liens in Ontario, can hinder property transactions and lead to legal disputes. However, with the right approach and knowledge, vacating a construction lien is achievable. This article will guide you through the steps to vacate a construction lien effectively in Ontario.

Understanding Construction Liens in Ontario

A construction lien in Ontario is a legal claim made by contractors, subcontractors, or suppliers who have not been paid for their work or materials on a property. This lien provides them with a security interest in the property, ensuring they are compensated for their services. While construction liens are a useful tool for contractors, they can be problematic for property owners, especially if they are invalid or filed in error.

Steps to Vacate a Construction Lien

1. Review the Lien for Validity

The first step in vacating a construction lien is to review its validity. Ensure the lien complies with Ontario’s Construction Act. Common issues that can invalidate a lien include:

  • Incorrectly filed paperwork
  • Failure to meet statutory deadlines (e.g., the lien must be registered within 60 days of the last day services or materials were provided)
  • Inaccurate lien amount
  • Lack of proper notice to the property owner

If you identify any of these issues, you may have grounds to challenge the lien’s validity.

2. Negotiate with the Lienholder

Before taking legal action, attempt to negotiate with the lienholder. Communication can often resolve disputes without the need for litigation. Discuss the outstanding amount and try to reach a settlement. If an agreement is reached, ensure the lienholder files a lien release with the local land registry office.

3. Post Security to Vacate the Lien

In Ontario, property owners can post security (a bond or cash) to vacate the lien from the title of the property. This security acts as a substitute for the property, allowing the property owner to proceed with transactions while the dispute is resolved. The security must be for an amount equal to the lien plus 25%, or $50,000, whichever is less.

4. File a Motion to Vacate the Lien

If negotiation fails and the lienholder refuses to release the lien, you may need to file a motion with the court to vacate the lien. This legal action involves:

  • Preparing the Motion: Work with an attorney to draft a motion outlining why the lien should be vacated. Include any evidence supporting your claim, such as proof of payment or documentation of lien errors.
  • Serving the Motion: Serve the motion to the lienholder according to Ontario’s legal requirements.
  • Attending Court Hearings: Attend court hearings and present your case. The court will review the evidence and decide whether to vacate the lien.

5. Obtain a Court Order

If the court rules in your favor, it will issue an order to vacate the lien. This court order must be filed with the local land registry office to remove the lien from the property records. Ensure you obtain a certified copy of the court order for your records.

Conclusion

Vacating a construction lien in Ontario can be a complex process, but it is manageable with the right steps. Reviewing the lien for validity, negotiating with the lienholder, posting security, and, if necessary, pursuing legal action are all crucial steps in this process. Always consult with a qualified attorney to guide you through the legal intricacies and ensure your rights are protected.

At Cowan & Carter Law Firm, we specialize in construction law and are here to help you navigate the process of vacating a construction lien in Ontario. Contact us today for a consultation and let our experienced team assist you in protecting your property and resolving your lien issues effectively.

DISCLAIMER: Please note this article is not legal advice. Always consult a lawyer for legal advice regarding your particular situation. The article is not necessarily a complete and accurate picture of the law – it is an article of a general nature.

Published on May 13, 2024