THE CONSTRUCTION LIEN ACT

John H. Daniels Faculty of Architecture, Landscape and Design

November 2016
prepared for Cara L Shamess

Sat., Nov. 12, 2016

Government records show Multiplex certified a lien against the Hotel X

property on Oct. 19 that is worth $32,573,260. Six more contractors took out
liens in the following days, ranging from just over $20,000 to almost $5
million. Liens are typically placed against properties as a means to keep a
right of possession until a debt is paid.

Tues., April 5, 2016

Any owner trying to sell, refinance or use the property to secure a line of
credit for business or personal reasons would have to explain the lien.

A spokeswoman for Pomerleau in Montreal said the construction company

cant pay its subcontractor because the TTC hasnt paid Pomerleau.

Lawyers in Calgary's construction

industry say the practice of filing
liens at the end of a large project is
not out of the ordinary
The National Music Centre made
headlines last week when it was
learned that several liens totalling
$4.1 million had been filed on the
property.
Often times on major projects
theres a number of liens filed either
by the general contractor or the
subcontractors. Its not
uncommon, said Brad Dobbin of
Calgary law firm Carbert Waite.
He said the Builders Lien Act gives
a mechanism for contractors,
subcontractors and workers to have
security for outstanding payments.
In large construction projects
none of the subcontractors or wage
earners have a direct contract with
the owner or developer, he said.
They have no way of suing.

August 31, 2016

THE CONSTRUCTION LIEN ACT,

R.S.O. 1990, c. C.30
Ontario legislation
Similar statutes in other provinces and
territories
May be called the Mechanics Lien Act (i.e.
Nunavut)
In British Columbia,it is called the Builders Lien
Act

TRADITIONAL CONSTRUCTION PYRAMID

WHAT IS A CONSTRUCTION LIEN?

In general, a lien is the right to hold the
property of another as security for the
performance of an obligation.
A CHARGING LIEN is the right to charge
property in anothers possession with:
THE PAYMENT OF A DEBT
or
THE PERFORMANCE OF A DUTY.
.

WHAT IS A CONSTRUCTION LIEN?

A construction lien is A CHARGING LIEN.
The holder of a valid construction lien is,
therefore, the holder of a charge against
the property upon which the work was
performed.
With non-payment, the lands may be sold
and the proceeds used to pay the claims of
those having valid liens.

WHO HAS A LIEN?

Any person who supplies services or
materials to a construction project has a
lien for the price of the service or
materials supplied.
Usually, general contractors,
subcontractors, material suppliers,
labourers, and ARCHITECTS

HOLDBACKS, GENERALLY
Every person who is required to make a
payment under a contract or subcontract
under which a lien may arise, is obligated
under the CLA to withhold 10% of the
value of the services or materials that
have been supplied under the contract or
subcontract for a specified period of time.

TWO TYPES OF HOLDBACK

1.Basic (or Statutory) Holdback
for the benefit of those who performed
work prior to the date of substantial
performance
2. Finishing Holdback
for the benefit of those who performed
work from substantial performance to
total performance

DONT FORGET ABOUT NOTICE HOLDBACK

Sections 24(1) and 24(2) of the CLA
A payer may, without jeopardy, pay
up to 90% in respect of the services or
materials supplied under the contract,
unless, before making the payment, he
receives written notice of a lien.
Must retain an additional amount equal
to the full value of the lien.

PRESERVATION & PERFECTION OF LIENS

1st Step Preservation of the Lien
2nd Step Perfection of the Lien
Preservation = claim for lien is
registered against title to the land
Perfection = Issuance of a statement of
claim and certificate of action and
registration of certificate of action against
title to the land

PRESERVATION & PERFECTION OF LIENS

Strict time limitations to preserve and
perfect liens
Preservation - 45 days after a certain
event this certain event varies
depending on which entity is preserving
the lien.
e.g. certificate of substantial performance
is published, last date of supply, etc

PRESERVATION & PERFECTION OF LIENS

Expiry of Liens:
See section 31(2) of the CLA
Contractors Liens
See section 31(3) of the CLA Liens of
Other Persons

PRESERVATION & PERFECTION OF LIENS

Perfection of a Lien:
Section 36(2) of the CLA
A preserved lien must be perfected by the
end of the forty-five-day period next
following the last day, under section 31,
on which the lien could have been
preserved.

SUBSTANTIAL PERFORMANCE OF A CONTRACT

A CONTRACT IS SUBSTANTIALLY PERFORMED:
When the improvement to be made under
that contract or a substantial part thereof
is ready for use
OR
is being used for the purposes intended
&

SUBSTANTIAL PERFORMANCE OF A CONTRACT

when the improvement to be made under
that contract is capable of completion
OR
where there is a known defect,
correction, at a cost of not more than:
(i) 3% of the first $500,000 of the contract
price
(ii) 2% of the next $500,000 of the contract
price
(iii) 1% of the balance of the contract price