In Ontario, a construction lien is a legal claim for payment for goods or services that have been supplied to improve a property. This is sometimes called a builders’ lien or mechanics’ lien in other provinces in Canada.
The idea here is that a person who supplies services or materials to improve real estate is entitled to a lien against the premises that they worked on. The person who is owed the money in a construction lien is called the “lien claimant”.
A construction lien is a pretty serious legal tool because it typically gets registered on title to real estate. It’s okay if you haven’t heard the expression “registered on title”.
What that basically means is the lien will be saved in a government record where it will be publicly visible to anyone who wants information about that property. More importantly, if a particular piece of real estate is purchased or sold while a lien is registered on title, some or all of the money in the transaction will be used to pay the lien claimant, whether or not the buyer or seller wants that to happen.
Having a construction lien registered against a property can also create other disruptions in a homeowner’s life. For example, if you have a home equity line of credit, it is very common for banks to freeze the homeowner’s line of credit when they discover that a lien has been registered against the homeowner’s real estate.
For more information about this topic, feel free to watch the video above, or read this longer article.