Author: Sarah Nadon – Law Student
Edited By: Ryan Carson
On July 1, 2018, the Ontario Construction Lien Act changed its name to the Construction Act. This name change allowed the Act to represent a broader scope of topics. While much of the Act remained untouched, several key components were changed. These amendments now drastically change the scope of the law governing the construction industry.
There are a number of factors that come into play when determining when a construction lien expires. There are three important time frames to consider:
Preservation of lien deadline;
Perfection of lien deadline;
Two-year limitation period to set action down for trial.
Preservation
The initial step to pursuing a construction lien claim is to preserve the construction lien by registering it against the title of the land. While most liens need to be registered, there are certain circumstances where the lien needs to be served.
In order to calculate the deadline for preserving a lien, it must be determined whether the individual was a contractor or another person (ex. supplier, subcontractor). If the individual is in fact a contractor (a person who supplied directly to the owner), the lien expires 60 days after the publication of the Certificate of Substantial Performance of its contract or the date of which the contract was completed or abandoned, whichever occurs first. Previously, in the old Act, this was a 45-day period.
Perfection of a Lien
Registering a Claim for Lien, preserves the lien and temporarily extends its life. A preserved lien has 90 days to be perfected or else it will expire. The lien must be perfected 90 days from the last day on which the lien could have been preserved. The time to perfect a lien was extended from 45 days to 90 days, giving the individual 150 to register and perfect a lien.
Pursuant to subsection 36(3) of the Act, if the lien attaches to the property, the lien is perfected by issuing a Statement of Claim and by registering a Certificate of Action on title of the property. If the lien does not attach to the premises, such as Crown land or a railroad crossing, it is perfected by starting an action to enforce the lien. In some circumstances a lien may be perfected by sheltering under the perfected lien of another claimant.
The action is started when the Statement of Claim is issued in a court office in a country in which the property is located. Unlike the Rules of Civil Procedure, which requires that a Statement of Claim be served within a six-month period, a lien must be served within 90 days of the claim being issued.
Due to the new act, lien claims with a value under $25,000 will be referred to the Small Claims Court. The objective of this is to make the court process less expensive and easier for the claimants to resolve their disputes.
Two Year Limitation Period
Once a lien is perfected within the time limits set out in the Construction Act, it is important to note the two-year limitation to set the action down for trial. If the lien is not set down for trial within the two-year limitation period, a motion may be brought to declare the lien as expired and to have the action dismissed.
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