Part of the Ontario construction contracts guide for owners.
Most owners first think about construction liens on the day one shows up on title. A subcontractor three tiers down hasn't been paid, a claim for lien is registered against your property, and suddenly your lender, your buyer or your tenant's lawyer wants to know what you're doing about it. The good news is that Ontario's Construction Act limits an owner's exposure far more than most people realize. The bad news is that the protection only works if you've been holding back, tracking notices and paying the right people at the right time.
This guide explains who can lien, the deadlines that govern a lien's life, what an owner actually owes, and the practical options when a lien lands. It reflects the amendments that came into force on January 1, 2026.
What a construction lien is
A construction lien is a statutory security right. Contractors, subcontractors and suppliers who supply services or materials to an improvement and aren't paid can claim a lien against the property itself, not just against the party that hired them. That's what makes liens powerful: a drywall supplier with no contract with you can still put a charge on your title.
The 2026 amendments added a new wrinkle for design work. Under a new subsection 14(4), architects and engineers who prepare designs for a planned improvement are presumed to have a lien for their fees where the owner retains holdback, although the owner can rebut that presumption by showing the services didn't enhance the value of the land.
Projects whose prime contract was entered into, or whose procurement started, before July 1, 2018 still fall under the old Construction Lien Act and its shorter deadlines. Everything below assumes the current Act applies.
An owner's exposure is usually the holdback
The single most important point for owners: a lien claimant who has no contract with you can generally recover from you only up to the holdback you were required to retain. Each payer in the chain must withhold 10% of the value of work as basic holdback. If you've retained it properly, your liability to sub-trades is usually capped at that amount, even if the unpaid sums further down are larger.
Two things break that protection.
- Not holding back. If you paid your contractor 100% of each invoice, you can still be liable to lien claimants for the holdback you should have kept. You may end up paying that amount twice.
- Ignoring a written notice of lien. Once you receive written notice of a lien, you must also retain the amount of that lien out of any further payments to the contractor, on top of basic holdback. Paying the full next invoice after receiving notice puts that money at risk.
Holdback has its own release rules, which changed significantly in 2026. Our guide to construction holdback and the new annual release rules covers them in detail.
The lien clock: preserve, perfect, proceed
A lien has a short, strict life. If the claimant misses a step, the lien expires. Owners should know the clock as well as claimants do, because an expired lien is often the fastest way to clear title.
Preservation (60 days). A lien is preserved by registering a claim for lien on title. For a contractor working directly for the owner, the 60 days run from the earlier of publication of a certificate or declaration of substantial performance, or the contract being completed, abandoned or terminated. For subcontractors and suppliers, the triggers also include the date of their last supply and certification of their subcontract as complete. Weekends and holidays count, but a deadline that falls on one rolls to the next business day.
"Completed" has a technical meaning. A contract is deemed complete when the cost to finish it, or fix known defects, is no more than the lesser of 1% of the contract price or $5,000. That can start the clock earlier than people expect. Termination now has its own rule too: from 2026, a notice of termination must be published within seven days of termination, and the publication date is deemed to be the termination date for lien purposes.
Perfection (90 more days). A preserved lien expires unless it's perfected by starting a court action and, where the lien attaches to the premises, registering a certificate of action on title. That must happen within 90 days after the last day the lien could have been preserved, so up to 150 days from the trigger in total.
Proceeding (2 years). A perfected lien expires two years after the action starts unless it has been set down for trial or a court has ordered a trial (section 37).
View the data
| Step | Deadline | What happens |
|---|---|---|
| Preserve | 60 days from trigger | Claim for lien registered on title |
| Perfect | 90 days after last day to preserve (day 150) | Action started; certificate of action registered |
| Proceed | 2 years from start of action | Action set down for trial or trial ordered |
Getting a lien off title: vacating
A registered lien can block refinancing, a sale or a construction draw. Owners rarely want to wait out a lawsuit, so the usual response is to vacate the lien under section 44 by posting security with the court. Once the court approves the security and it is paid in, the lien is removed from title and attaches to the security instead.
The security required is the full amount of the lien plus 25% of that amount, capped at $250,000, as security for costs. It can be cash, an irrevocable letter of credit or a lien bond. The wording of letters of credit has been scrutinized: in TruGrp Inc. v. Karmina Holdings Inc. (2024 ONSC 2165), a bank's first letter was rejected over unclear draw conditions before a revised version was accepted. Have counsel check the instrument before you rely on it.
View the data
| Lien amount | Security for costs | Total security |
|---|---|---|
| $200,000 | $50,000 | $250,000 |
| $600,000 | $150,000 | $750,000 |
| $1,500,000 | $250,000 (cap) | $1,750,000 |
Vacating doesn't decide who's right. It moves the fight off your title. The claimant still has to prove the lien, and you or your contractor still have to defend it. But it lets the project, the financing and the deal keep moving.
Who posts the security is a commercial question. Where the lien comes from a dispute between your contractor and its sub-trade, the owner usually isn't the party that should be paying for the security. Check whether your contract requires the contractor to discharge liens arising from its own sub-trades, and give it written notice to act before you fund anything yourself.
Termination, set-off and the holdback
When an owner terminates a contractor, the instinct is to use the remaining holdback to pay the replacement contractor. The 2026 amendments to section 30 make that clear: if a contract or subcontract is abandoned or terminated, holdback can't be used to pay for substitute work or to satisfy claims against the defaulting contractor until the lien rights against it have expired or been resolved. Budget for the replacement contractor from somewhere else.
That rule makes the seven-day termination notice more important. Publishing promptly fixes the termination date, starts the 60-day lien clock and gets the owner to the point where holdback questions can be settled sooner.
Practical consequences for owners
On programs we've supported, lien problems rarely come from the law itself. They come from gaps in administration:
- Holdback not tracked by contract. On projects with several direct contracts, consultants, early works and owner-supplied packages, each contract needs its own holdback record. One master spreadsheet usually isn't enough.
- Notices of lien going to the wrong inbox. A written notice of lien sent to the site office or a project manager is still notice. If accounts payable doesn't hear about it before the next payment run, the owner may have paid money it was required to keep.
- No title monitoring. Registered liens appear on title before anyone calls the owner. A periodic title search during construction, and before every draw or release, catches them early.
- Late termination paperwork. Termination is stressful and the notice of termination is easy to forget. Missing the seven-day window creates arguments about when the lien clock started.
- Lenders discovering liens first. Most construction loans require clear title before each advance. A lien found by the lender's lawyer delays funding and damages credibility.
Prompt payment and lien rights also interact. A subcontractor who isn't paid on the statutory timeline is more likely to lien and, increasingly, to adjudicate. Our guide to Ontario prompt payment rules sets out the owner's 28-day clock and the notice of non-payment process.
What owners should do
- Hold back 10% on every contract, and record it by contract. Keep a holdback ledger for each contract that can be reconciled at any point to invoices, payments and releases.
- Route all lien notices to one place. Name a single contact for written notices of lien in the contract and tell site staff to forward anything that looks like one the same day. Freeze the notified amount before the next payment.
- Search title before every payment that matters. Before progress draws, holdback releases and final payment, confirm nothing new is registered.
- Calendar the lien deadlines. Track the publication date of each certificate of substantial performance, each completion date and each termination notice, and the 60- and 150-day marks that follow.
- Have a vacating plan ready. Know in advance whether you'd use cash, a letter of credit or a lien bond, and who approves it. When a lien threatens a closing or a draw, days matter.
- Get legal advice early. Liens are procedural and unforgiving for both sides. A short call with construction counsel when a notice arrives is far cheaper than a dispute about money paid in error.
The bottom line
Ontario's lien regime is built to protect owners who follow it. Hold back properly, respect written notices, watch the clock and keep title clear, and a lien is usually an administrative problem rather than a financial one. Skip those steps and the owner can end up paying for the same work twice.
Want an independent check of your holdback records and lien risk before your next draw or closing? Book a 30-minute call with Benjamin R. Consulting.
Sources: J. McClelland and J. Nathwani, Ontario's Construction Act: Key 2026 Amendments and Practical Implications (Ontario Bar Association, January 2026); Blakes, Amendments to Ontario's Construction Act Now in Force (January 2026); Norton Rose Fulbright, Construction Act changes in Ontario are finally here; Link2Build Ontario, A Layperson's Guide to the Construction Act, 2nd edition (2019); E. Hives, SB Sorbara Law, Important Deadlines for Preserving and Perfecting a Construction Lien (2024); Lerners LLP, How Long Do You Have to Preserve a Construction Lien? (2025); Lerners LLP, Knowing When to Hold'em: Calculating Basic Holdback Amounts; Miller Canfield, Construction Liens in Ontario (2023); R. Puma, Robins Appleby LLP, The Fine Print: Letters of Credit to Vacate Liens (2024). The vacating examples are illustrative. This article is general information, not legal advice. Get legal advice on your contract and specific circumstances.