What is a lien, and can a contractor put one on my house?

Yes, contractors in Ottawa can legally place a construction lien on your property if they aren't paid for work performed, and this lien can prevent you from selling or refinancing your home until resolved.

In Ontario, construction liens are governed by the Construction Act (formerly the Construction Lien Act), which gives contractors, subcontractors, and material suppliers the right to claim an interest in your property when they've provided labor or materials but haven't been paid.

How Construction Liens Work in Ottawa

A construction lien essentially puts a legal claim against your property's title. Once registered with the Land Registry Office, it creates a cloud on your title that must be resolved before you can sell, refinance, or transfer ownership. The lien amount can include the unpaid work value plus interest and legal costs.

In Ottawa and throughout Ontario, contractors have 60 days from their last day of work to register a lien. They must then take legal action within 90 days of registration to preserve the lien, or it expires. However, even an expired lien remains on title until formally removed.

The 10% Holdback Protection

Ontario's Construction Act provides homeowners with important protection through the mandatory holdback system. You're legally required to hold back 10% of the contract value for 60 days after substantial completion. This holdback period allows subcontractors and suppliers to register liens if the general contractor hasn't paid them.

For example, on a $50,000 renovation in Ottawa, you'd hold back $5,000 for 60 days. After this period, if no liens are registered, you can safely release the holdback. This system protects you from having to pay twice - once to your contractor and again to unpaid subcontractors who might lien your property.

Red Flags and Protection Strategies

Be wary of contractors who demand full payment upfront or refuse to acknowledge the holdback requirement - legitimate Ottawa contractors understand this is standard practice. Always verify your contractor's WSIB clearance certificate at wsib.ca/clearances, as contractors without coverage may be more likely to face financial difficulties leading to lien situations.

Ensure your contract clearly outlines payment schedules tied to completion milestones, never project start dates. A typical Ottawa renovation should follow a schedule like 10% to start, 25% at rough-in completion, 25% at drywall completion, 30% at substantial completion, and 10% holdback released after the lien period.

If You Face a Lien Situation

If a lien is registered against your Ottawa property, don't panic but act quickly. Contact a construction lawyer immediately, as you have limited time to respond. You can potentially have the lien removed by paying into court, posting security, or proving the claim is invalid.

For disputes or questions about construction liens in Ottawa, contact the City of Ottawa Building Code Services at 613-580-2424. For legal advice specific to your situation, consult with a lawyer experienced in Ontario construction law.

The key is prevention: work with properly licensed contractors, maintain proper payment schedules with holdbacks, and verify all subcontractors are being paid throughout your project.