Lien on Us: Timelines for a Lien

The golden rule when dealing with construction liens is that they must be preserved and perfected on time. Preserving a lien requires registering a claim for lien on title to the property or in certain cases, giving a copy of the claim for lien through the proper channels. Perfecting a lien is the next step in the process and requires commencing an action to enforce the lien and potentially registering a certificate of action on title to the relevant property. Ontario’s courts have repeatedly confirmed that they have no ability to revive an expired lien if a deadline is missed—so it is essential for contractors and suppliers to be aware of the timelines associated with their lien rights.

After determining if the work you performed created a lien in the first place, the next step in the process is to determine which version of the Construction Act you are working with. For lien preservation and perfection dates, the key date to keep in mind is July 1, 2018. If the work you performed was on a project with a prime contract or procurement process which pre-dates July 1, 2018, the older, Construction Lien Act applies. For a general contractor, this means a 45-day period to preserve a lien, counted from the earliest of the following events:

The date on which a certificate or declaration of substantial performance of the contract is published; or
The date the contract is completed or abandoned.

Subcontractors and supplier on the other hand, must preserve their liens within 45 days counted from the earliest of the following events:

The date on which a certificate or declaration of substantial performance of the contract is published;
The date on which the person last supplied services or materials to the improvement; or
The date on which the subcontract is certified as completed.

For projects with a prime contract or procurement process which post-dates July 1, 2018, the new extended timelines to preserve liens from the Construction Act apply. For a general contractor, this means that it must preserve liens within 60 days following the earliest of the following events:

The date on which a certificate or declaration of substantial performance of the contract is published; or
The date the contract is completed, abandoned, or terminated.

Subcontractors and suppliers also benefit from the 60-day period prescribed by the Construction Act for all projects they work on with a prime contract dated after July 1, 2018. For subcontractors and suppliers, the relevant trigger date starting the lien period is the earliest of the following events:

The date on which a certificate or declaration of substantial performance of the contract is published;
The date on which the person last supplied services or materials to the improvement;
The date on which the contract is completed, abandoned, or terminated; or
The date on which the subcontract is certified as complete.

There are three important points to keep in mind when determining the applicable deadline to preserve a lien. First, the prime contract is not necessarily your contract. The prime contract is the first contract related to an improvement. This means that for some projects it is still possible that the old act timelines apply—even if your work on the project did not start until recently. If you are not certain about the date of the prime contract or the procurement process you should serve a section 39 request for information. If time does not allow for this step, it is best for lien claimants to err on the side of caution and act as if the old act rules apply

Second, in addition to extending the period to preserve a lien, the new Construction Act also identifies the termination of a contract as a potential start date for lien periods. In practice, this means that monitoring construction publications like the Daily Commercial News for publication of notices of termination and substantial performance is an essential component of proper contract administration.

Third, for some liens falling under the new Construction Act, commencing an adjudication can extend the timeline to preserve a lien (although, arguably not to perfect one) for up to 45-days after documents are provided to an adjudicator. Keep in mind that this is a limited exception to the general requirements about lien timing and only applies to liens which were unexpired at the time adjudication was commenced.

Once you have preserved your lien, the next step in the process is to perfect the lien. For liens falling under the old act, you must perfect your preserved lien within 45-days of the last day on which the lien could have been preserved. For liens under the new act, this period is extended to 90 days. Regardless of whether your lien is under the old or new act, it is important to remember that the starting date for the perfection period is not necessarily the date you preserved the lien on (unless you preserved the lien on the last possible day to do so). The 45- or 90-day period starts to run from the last day you could have preserved on, which may buy you some extra time to perfect in certain situations.

Finally, once a lien has been perfected by commencement of a claim (and if the lien is on title to the property, registration of a certificate of action) the lien claimant must progress the action and ensure that the matter is set-down for trial within two years from the commencement of the claim. This requirement will be satisfied where:

An order is made for the rial of an action in which the line may be enforced or
An action in which the lien may be enforced is set down for trial.

Keeping track of lien timing can be a difficult task—especially with all of the other issues an unpaid lien claimant has to juggle — but it is one that is essential to preserve an unpaid contractor or supplier’s most powerful rights under the Construction Act. We are here to answer any questions you might have about the lien process and to help with any problems that come up on your construction projects.

This article is not legal advice and is provided for informational purposes only