The relative-new Construction Act (Ontario) sets out some new provisions regarding the handling of liens. The Construction Act gives the ‘owner’ a significant number of routes to deal with the lien.
Most often the owner’s principal immediate step is to pay monies into court and have the lien discharged and removed from title. Most owners who have mortgages do not realize that there is likely to be a fine-print clause in the mortgage prohibiting the existence of liens on title. The existence of the lien on title can constitute a default of the mortgage and entitle the mortgagee to take action against the mortgagor. While the usual practice is for the “A” lenders in Canada to send a demand letter there are usually very tight timelines requiring the mortgagor to have the lien discharged forthwith.
The point is that the person facing a lien claim usually has to act immediately to maintain mortgage currency.
Other steps that are available to the ‘owner’ faced with a lien claim are: (i) to cross-examine the lien claimant forthwith. Most owners don’t understnd how important this tool is, lawyers understand it. Making a forthwith demand that the lien-claimant submit to examination to explain the basis of the lien often leads to lien-claimants failing this step and the lien can be discharged for this failure.
Another usual step is to contest the lien registration time limits. That is, to show a court that the lien claimant is out of time in filing. This is a usual owner-claim and usually needs evidence. But sometimes it is too obvious to dispute that the contractor is out of time.
Below are some of my recent case comments on lien questions:
Construction Act partial summary judgment: when will it not work?
Construction Act summary judgment: leave requirement: is it a ‘statutory anomaly’?
Construction Act summary judgment: can the facts be bifurcated?
discharging the lien when the contractor is not a ‘contractor’ as required by the Act
summary judgment on the contractor’s invoice when the owner has a counterclaim: Arcamm
Privity of contract: leaking parking garage?
