Construction liens — what, why, when and how
Let’s break down some of the complicated steps in preserving and perfecting liens in construction law.
The Construction Act serves to protect contractors and companies supplying labour and material for projects and to job sites. The legislation is designed to help resolve disputes that arise in construction through a streamlined process.
Anyone who has been contracted to and has supplied services and/or materials to an “improvement” can lien, including to mean anyone who makes an alteration, addition or capital repair to a property; installs essential industrial, electrical or mechanical equipment; and completes or partially completes a demolition or removal of a building or structure.
What to lien?
The lien should reflect the price of services and materials that you provided on a project. It is very important to ensure that the lien claim reflects the correct amount, as this cannot be fixed once the time limit to preserve a lien expires.
Why lien?
A lien can provide security by ensuring that you are paid even if the debtor goes bankrupt, and can also entitle you to receive payment from holdback funds.
When to lien?
To have a successful lien claim, you must follow the strict timelines prescribed in the Construction Act to prevent your right to lien from expiring.
As soon as materials and/or labour are provided on-site, you have a right to lien.
Here are the three general steps to preserving and perfecting your lien:
- Preserve the lien: Register the lien within 60 days of the date the contract was completed, terminated or abandoned; or within 60 days of the last date of supply of services or materials if you are a subcontractor.
- Perfect the lien: Commence an action in the Superior Court of Justice within 90 days from the last day that the lien could have been preserved.
- Settle the matter or set it down for trial: Within two years of commencing the action.
How to lien?
A specific form is used in the registration of liens. It is important to ensure that the information in the form is accurate and complete.
This article was originally published by The Hamilton Spectator.