Many people in the construction industry believe that the only thing they need to know regarding construction liens is the number of 60 days.
I am referring to the power provided by the Ontario Construction Act for a provider of construction services on project to file a lien within 60 days after their “last day on site” (or last provision of service or materials).
While this rule applies in many situations, the Ontario Construction Act contains several rules that change when the 60-day clock actually begins and as such blindly relying on the general 60-day rule can result in the loss of your lien rights.
Below are two common situations where parties may not realize that their lien rights have been affected.
Multiple Contracts on the Same Project
If there are two separate contracts on one project, each contract may generate its own lien rights, which must be preserved and enforced separately.
The ONSC in Prasher Steel Ltd. v. Pre-Eng Contracting Ltd. 2022 ONSC 3458 stated that “A lien claimant cannot enlarge the time limit for filing a claim for lien by artificially merging separate contracts performed on the same improvement.”
However, the Divisional court in Prasher Steel Ltd. v. Pre-Eng Contracting Ltd. 2024 ONSC 4772 clarified this legal principle in stating that Subcontractor lien claims do not expire on a subcontract-by-subcontract basis under s. 31(3)(ii) of the Act: and their lien rights persist until 60 days after last supply “to the improvement”. However, contractor lien rights are governed by 31(2) of the Act and each contract must be preserved and enforced separately under this section of the Act.
Mid-Project Contractor Changes or Termination
The section of the Ontario Construction Act that addresses lien rights when a contractor changes—such as upon abandonment or termination of a contract in the middle of a job—is section 31(2). This section states that if a contractor abandons or terminates the contract, the period to register a lien runs from the date of abandonment or termination, not from the date of last work or substantial performance on site.
The examples above represent only two of the many nuanced situations that can affect when the lien clock starts running. Because lien timelines are strict and can be complex, it is crucial to seek legal advice as soon as a potential lien issue arises.
If you are a contractor or subcontractor and have questions regarding your lien rights, please feel free to reach out to the undersigned to discuss.
Ariel Dorfman, Associate Lawyer