CONSTRUCTION LIENS: A SUMMARY OF THE PROCEDURE
Construction trades and suppliers have had since 1873 a
special construction lien remedy whereby the land they help to
improve can be charged as security for their unpaid accounts.
This memo outlines the procedure for a construction lien claim.
The Lien Arises
A lien is a charge on land, like a sheriff's execution or a
mortgage. It arises when a contractor or subcontractor supplies
services or materials to improve the land. In order to enforce a
construction lien, the lien claimant must take various steps as
outlined below.
Register Claim for Lien
Within forty-five (45) days after the last supply of work or
materials, the lien claimant must register against title to the
property a document called a "Claim for Lien", which is
a special form. Some lien claimants think that they cannot
register such a claim until the thirty-day credit period on their
invoice has expired. This is incorrect; you can register your
claim for lien even while you are performing the work. The claim
for lien must contain a sworn statement that the contract and the
amounts claimed to be owing are correct. By registering a claim
for lien, you have "preserved" your lien.
Register Certificate of Action
Within ninety (90) days of the last supply of work and
materials, the lien claimant must have started an official court
action. When the action is started, the claimant obtains from the
court offices a "Certificate of Action", which must be
registered on title to the land within that ninety-day period.
This step is called "perfecting" your lien.
Settlement Conference
Although technically it is an optional step, in practice the
next step in a lien claim (assuming the defendant has defended
the court action) is obtaining an appointment with a court
officer (at Toronto this is the Master) for a settlement
conference. You then serve a notice of this conference on all of
the interested parties. At the conference, the court officer will
set up a schedule to proceed to trial.
Trial of the Action
A lien action trial is no different than a trial in any other
action, except that you do not have the advantage of examinations
for discovery. A judgment at the end of the trial generally
provides a court declaration about the validity of the lien or
liens against the property, and the entitlement of each lien
claimant. It provides that if the property owner fails to pay the
judgment amount into court, the owner's interest in the property
may be sold.
Procedural Rules Are Very Strict
The time limits and other procedural rules for construction
lien claims are interpreted very strictly, because this is a
special privilege that most contract claimants do not have. When
you come to see a lawyer about a lien claim, keep in mind that
the lawyer needs to search title, prepare documentation, and
arrange to register that documentation in the proper land
registry office. We urge you to consult a lawyer no later than
thirty-five (35) days after the last significant supply of work
and material.
Legal Costs
At Fleury, Comery, our fees are based mainly on the time spent
on any particular matter. In our experience, to start a lien
claim by arranging to prepare and register a claim for lien
document will cost a client a minimum of $600.00 for our fees,
plus disbursements for title searches and registrations amounting
to perhaps $200.00. We do not generally recommend that clients
proceed with construction lien claims until they have had an
opportunity to review with us the alternatives to this procedure,
such as Small Claims Court claims, or claims under the current
"Simplified Rules of Procedure".
At Fleury, Comery, our partner, Greg McConnell, is experienced
in construction litigation, including construction lien claims.
If you or someone you know in the construction trades is faced
with a situation where payment for their work and materials is
not forthcoming, please do not hesitate to refer them to Mr.
McConnell for a review of their options.
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