Construction Liens in Ontario: Why Most Fail Before Enforcement
Learn why most construction liens in Ontario fail before enforcement. Understand lien registration, perfection, deadlines, and common mistakes that cause liens to expire.
Construction liens are powerful tools for contractors, subcontractors, and suppliers to secure payment in Ontario. However, most liens fail before they can be enforced, not because the underlying claim is invalid, but because strict deadlines and procedures weren’t followed. This article explains why liens fail and how to avoid common mistakes.
The Two-Step Process: Registration and Perfection
Many people think that registering a lien is enough, but it’s only the first step. To have an enforceable lien, you must:
- Register the lien within the required time (60 days from last work or supply for projects under the current Construction Act)
- Perfect the lien by starting a court action within the required time (90 days from the last day the lien could have been preserved for projects under the current Construction Act)
Note: The 60-day and 90-day deadlines apply to projects where the prime contract was entered into on or after July 1, 2018. For older projects, the previous Construction Lien Act rules apply (45 days for both preservation and perfection).
If either step is missed or done incorrectly, the lien fails.
Why Liens Fail: Common Reasons
Missing the Registration Deadline
For projects under the current Construction Act (where the prime contract was entered into on or after July 1, 2018), the deadline for registering a lien is 60 days from the last work or supply. This deadline is strict and unforgiving. Missing it by even one day means you lose your lien rights entirely.
Common mistakes:
- Calculating the deadline incorrectly
- Not understanding what counts as “last work or supply”
- Assuming warranty work extends the deadline (it may not)
- Waiting too long to register
Failing to Perfect the Lien
Even if you register the lien correctly, you must perfect it within 90 days of the last day the lien could have been preserved (for projects under the current Construction Act) by starting a court action. Many people register the lien but then don’t follow through with the court action, causing the lien to expire.
Common mistakes:
- Not understanding that perfection is required
- Not starting the court action in time
- Not serving the necessary documents
- Assuming registration is enough
Incorrect Legal Description
The lien must be registered against the correct legal description of the property. Errors in the legal description can invalidate the lien, even if everything else is done correctly.
Common mistakes:
- Using the municipal address instead of the legal description
- Copying the legal description incorrectly
- Registering against the wrong property
- Not verifying the legal description before registering
Not Understanding “Last Work or Supply”
Determining when the “last work or supply” occurred is crucial for calculating the registration deadline, but it can be complex.
What counts:
- The last day you provided work or materials for the project
- Not the last day you were on site
- Not the last day you sent an invoice
- Not the last day you received payment
Common mistakes:
- Assuming the deadline is from the invoice date
- Not accounting for warranty work that may or may not extend the deadline
- Confusing cleanup or minor repairs with actual work
Not Following Proper Procedures
The Construction Act has specific procedures that must be followed. Failing to follow them can invalidate the lien.
Common mistakes:
- Not filing in the correct land registry office
- Not including required information in the claim for lien
- Not serving documents properly
- Not following court procedures for perfection
Why Most Liens Fail
While exact statistics aren’t publicly available, experienced construction lawyers observe that a significant percentage of liens fail, and most failures are due to procedural errors rather than invalid claims. Common reasons for failure include:
- Missed deadlines: Often cited as the most common reason liens fail
- Failure to perfect: Many liens are registered but never perfected
- Incorrect legal descriptions: A common error that can invalidate liens
- Procedural mistakes: Failing to follow required procedures under the Construction Act
How to Avoid Common Mistakes
Understand the Deadlines
The deadlines in the Construction Act are strict. Mark them on your calendar and don’t wait until the last minute.
Get the Legal Description Right
The legal description is crucial. Verify it before registering the lien. Don’t assume the municipal address is enough.
Don’t Assume Registration is Enough
Registering the lien is only the first step. You must also perfect it by starting a court action within 90 days.
Understand “Last Work or Supply”
Determine when your last work or supply occurred. This is the starting point for calculating your deadline. If you’re unsure, get legal advice.
Follow Procedures Exactly
The Construction Act has specific procedures. Follow them exactly. Don’t take shortcuts.
Get Legal Advice Early
Construction lien law is complex, and mistakes can be costly. Getting legal advice early can help you avoid common pitfalls.
What Happens When a Lien Fails
Loss of Lien Rights
If you miss a deadline or make a procedural error, you lose your lien rights. You cannot register a new lien (the deadline has passed), and the original lien is invalid.
You May Still Have Other Remedies
Even if your lien fails, you may still be able to:
- Sue for payment (if within the limitation period)
- Pursue other remedies under the Construction Act
- Pursue common law remedies
However, you’ve lost the security of the lien, which is a significant disadvantage.
Financial Consequences
Losing lien rights can have significant financial consequences:
- You become an unsecured creditor
- You may have difficulty collecting payment
- You may need to pursue more expensive litigation
Key Takeaways
- Most construction liens fail due to procedural errors, not invalid claims
- Registration is only the first step—you must also perfect the lien
- Deadlines are strict and unforgiving—missing them by even one day can be fatal
- Getting the legal description correct is crucial
- Understanding “last work or supply” is essential for calculating deadlines
- Getting legal advice early can help avoid costly mistakes
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This article is for informational purposes only and does not constitute legal advice. Every situation is unique, and the information here may not apply to your specific circumstances. For advice tailored to your situation, consult with a qualified legal professional licensed to practice law in Ontario.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. For advice specific to your situation, please contact us for a consultation.