LIEN ON ME - PROPOSED CHANGES TO THE LIEN PROVISIONS OF THE CONSTRUCTION LIEN ACT
MARCH 2017 | AUTHOR: SHAUN SINGH
The Ontario government recently released a reform report proposing a complete overhaul of the Construction Lien Act. The recommendations were sought by the government in an attempt to modernize the Act, address promptness of payment issues and to propose an expedited dispute resolution process. There are a number of steps that must take place before the recommendations can become law, but the government is fully supportive of the process and draft legislation is expected this Spring.
Typically, placing a lien is the first thing that comes to mind when a contractor, supplier or subcontractor doesn't get paid for performing work or supplying materials on a project. In Ontario, there are a number of steps that must be taken in order to place, preserve and perfect a construction lien. Under the current regime, a lien holder must take action to preserve their lien within 45 days of the date the contract is completed or abandoned, for a contractor, or, in the case of a sub-contractor or supplier, the last day of substantial work or the last day materials were supplied. Thereafter, the lien holder has an additional 45 days to perfect the lien, which generally entails commencing an Action to enforce the lien and registering a Certificate of Action with the Land Registry Office. Finally, the Action must be set down for trial within 2 years, otherwise the Court will declare that the lien has expired and will make an order dismissing the Action to enforce that lien and vacating the registration of the lien and the Certificate of Action.
Below is an excerpt of some of the proposed changes that may affect your lien rights, as a contractor, supplier or subcontractor, in the near future.
Typically, placing a lien is the first thing that comes to mind when a contractor, supplier or subcontractor doesn't get paid for performing work or supplying materials on a project. In Ontario, there are a number of steps that must be taken in order to place, preserve and perfect a construction lien. Under the current regime, a lien holder must take action to preserve their lien within 45 days of the date the contract is completed or abandoned, for a contractor, or, in the case of a sub-contractor or supplier, the last day of substantial work or the last day materials were supplied. Thereafter, the lien holder has an additional 45 days to perfect the lien, which generally entails commencing an Action to enforce the lien and registering a Certificate of Action with the Land Registry Office. Finally, the Action must be set down for trial within 2 years, otherwise the Court will declare that the lien has expired and will make an order dismissing the Action to enforce that lien and vacating the registration of the lien and the Certificate of Action.
Below is an excerpt of some of the proposed changes that may affect your lien rights, as a contractor, supplier or subcontractor, in the near future.
Ultimately, the proposed lien changes provide greater leeway for suppliers, contractors and subcontractors; however, it is likely that an owner would be obligated to hold back 10% of the value of the services or materials supplied under the contract or subcontract for a greater period of time. While in
theory this would mean that it could take longer to resolve issues of non-payment, there is also a proposed system for the mandatory adjudication of disputes to mitigate payment delays. The best way to ensure that your lien rights are preserved is to contact a lawyer as soon as you become aware of a payment issue. The Courts have taken a strict approach to following the timelines outlined in the Act, and have refused to grant exceptions even when all parties have consented to amend the deadlines.
If you have any questions relating to any of the above, please do not hesitate to contact Shaun Singh at ssingh@kmblaw.com or 905.276.0432.
theory this would mean that it could take longer to resolve issues of non-payment, there is also a proposed system for the mandatory adjudication of disputes to mitigate payment delays. The best way to ensure that your lien rights are preserved is to contact a lawyer as soon as you become aware of a payment issue. The Courts have taken a strict approach to following the timelines outlined in the Act, and have refused to grant exceptions even when all parties have consented to amend the deadlines.
If you have any questions relating to any of the above, please do not hesitate to contact Shaun Singh at ssingh@kmblaw.com or 905.276.0432.
This article is provided for general information purposes and should not be considered a legal opinion. Clients are advised to obtain legal advice on their specific situations.
