Liens on Your Property
A lien is a legal notice that someone is claiming the right to be paid from the value of your property. If your contractor does not pay suppliers or subcontractors for materials or work on your project, you could end up with a lien on your property title or deed. If that happens, you will probably be unable to renew your mortgage or sell your home until the lien holder has been paid and the lien removed.
Paying your contractor on time is no guarantee against a lien; if the contractor fails to pay subcontractors for materials or labour, a lien can be placed on your property.
How can you protect yourself? Lien laws vary across Canada, but all require that you hold back a portion of the total job cost (usually 10% to 15%) for 30 to 45 days after the work is completed. During this time, suppliers and/or subcontractors who did not get paid must register their liens with the courts. Your financial liability is limited to the amount of the holdback. Before you pay your contractor this final holdback payment, check with your land registry office to ensure that no liens have been registered against your property.
For more information, contact your provincial Consumers’ Affairs or Protection office and ask about applicable lien requirements where you live. Also, see the Laws Where You Live for contact information.