ARTICLE
16 August 2018

Lien On Me - The Problems With Construction Liens Being Registered On The Common Elements

MS
Macdonald Sager LLP
Contributor
Macdonald Sager  LLP   logo
Founded more than 25 years ago, Macdonald Sager is a full-service law firm that grows and thrives with each passing year. Our lawyers offer a unique combination of skills, expertise and insight that allows us to effectively asses your legal challenges and deliver strategic, creative solutions. Our structure as a mid-sized law firm enables us to be highly results-oriented and client-focused, yet timely and cost-effective.
Condominium corporations routinely hire contractors to perform work on the common elements of their respective buildings.
Canada Real Estate and Construction
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Condominium corporations routinely hire contractors to perform work on the common elements of their respective buildings. Most of the time, the contractors are paid for their work, and owners are not impacted in any way. However, what happens if the contractors are not paid, and a dispute arises between the parties regarding the work that was performed? I would safely assume that most condominium owners in Ontario are unaware of the fact that a contractor has the legal right under the Construction Lien Act to register a lien that will show up on title to every unit in the building.

In other words, if a contractor has a $15,000 dispute with a condominium corporation that has 100 units, and the contractor decides to register a construction lien, the lien will be registered against title to all 100 units. If any of the 100 unit owners want to sell their unit(s), they will need to take steps to the have the lien vacated or discharged before closing. This can be a tremendous inconvenience and cost for many owners.

While recent Construction Lien Act amendments have further clarified these rules (see Bill 142), and there is a specific allowance for owners to apply to court to have the liens affecting their individual units vacated, the basic problem still remains, in that contractors have a significant amount of leverage when performing work on the common elements.

If construction liens are registered against the common elements, the Board of Directors will often have their lawyers move to vacate (pay into court) the amount of the lien. However, this is not always possible if the lien is for a significant amount of money.

Condominium Boards and property managers need to be acutely aware of the legal consequences of not paying their contractors. There is far more at risk than simply a lawsuit.

About Mackrell International - Canada - MacDonald Sager Manis LLP is a full service business law firm in Toronto, Ontario and a member of Mackrell International. Mackrell International - Canada is comprised of four independent law firms in Alberta, British Columbia, Ontario and Quebec. Each firm is regionally based and well-connected in our communities, an advantage shared with our clients. With close relations amongst our Canadian member firms, we are committed to working with clients who have legal needs in multiple jurisdictions within Canada.

This article is intended to be an overview and is for informational purposes only.

ARTICLE
16 August 2018

Lien On Me - The Problems With Construction Liens Being Registered On The Common Elements

Canada Real Estate and Construction
Contributor
Macdonald Sager  LLP   logo
Founded more than 25 years ago, Macdonald Sager is a full-service law firm that grows and thrives with each passing year. Our lawyers offer a unique combination of skills, expertise and insight that allows us to effectively asses your legal challenges and deliver strategic, creative solutions. Our structure as a mid-sized law firm enables us to be highly results-oriented and client-focused, yet timely and cost-effective.
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