What is the Ontario Construction Lien Act and how does it protect me?

The Ontario Construction Lien Act (now called the Construction Act) is a powerful law that protects Ottawa homeowners by requiring you to hold back 10% of each payment to contractors until 60 days after project completion - this holdback protects you from unpaid subcontractors and suppliers placing liens on your property.

How the Construction Act Protects Ottawa Homeowners

Under Ontario law, when contractors don't pay their subcontractors or material suppliers, those unpaid parties can place a construction lien on your property - even if you paid your contractor in full. The Construction Act protects you through the mandatory holdback system.

Here's how it works in Ottawa: You must hold back 10% of the value of work completed at each payment milestone. So if your contractor invoices $10,000 for completed work, you pay $9,000 and hold back $1,000. This continues throughout the project.

The holdback period starts when work is "substantially completed" - meaning the project is ready for use, even if minor deficiencies remain. You hold the total accumulated holdback (10% of the entire contract value) for 60 days from substantial completion. After this period, if no liens have been registered against your property, you can safely release the holdback.

Ottawa-Specific Lien Registration Process

In Ottawa, construction liens must be registered at the Ottawa Land Registry Office within 60 days of the last work performed or materials supplied. You can check for liens against your property through Ontario's OnLand system or by visiting the Land Registry Office at 161 Elgin Street.

The City of Ottawa Building Code Services (613-580-2424) can provide guidance on substantial completion dates for permitted work, which is crucial for calculating your holdback release date.

What Happens If You Don't Follow the Holdback Rules

If you fail to maintain proper holdbacks and a lien is placed on your Ottawa property, you could end up paying twice - once to your contractor and again to satisfy the lien. The Construction Act makes property owners personally liable for these amounts up to what they should have held back.

For example, if you have a $50,000 renovation in Kanata and don't hold back the required $5,000, then an unpaid electrical subcontractor places a $3,000 lien on your home, you're responsible for that $3,000 even though you already paid your general contractor.

Protecting Yourself Beyond Holdbacks

Always verify your contractor has current WSIB clearance through wsib.ca/clearances before starting work. This protects you from potential WSIB liens if workers are injured on your property. Also ensure your contractor carries proper liability insurance - request a certificate of insurance naming you as additional insured.

For electrical work, verify your contractor's ESA license at esasafe.com/contractor-locator, and for gas work, check TSSA certification at tssa.org. Licensed contractors are more likely to pay their subcontractors and suppliers properly.

Getting Help in Ottawa

If you're facing lien issues or need guidance on holdback procedures, contact Legal Aid Ontario at 1-800-668-8258 or consult with a construction lawyer. The Ontario Consumer Protection office (ontario.ca/consumer) also provides resources on construction contracts and lien rights.

The Construction Act's holdback system is your primary protection against liens, but it only works if you follow the rules strictly. Never let contractors pressure you into releasing holdbacks early - those 60 days after substantial completion are your safety net in Ottawa's construction market.