In KingSett Mortgage Corporation v Mapleview Developments Ltd, the Court of Appeal for Ontario delivered a significant ruling regarding the priority of lien claimants and building mortgagees under the Construction Act. The decision provides clarity on how to calculate the quantum of a lien claimant’s holdback where a priority dispute (a disagreement over who gets paid first from the property) arises with a mortgagee.
Balancing the Rights of Mortgagees & Lien Claimants
One of the key purposes of the Construction Act is to protect the rights of contractors, subcontractors, and suppliers who provide services or materials to improve properties in Ontario.
When these parties go unpaid, the Act allows them to commence a construction lien action. The lien is registered against the title of the property and serves as a “public notice to all” that there is an outstanding claim relating to the improvements to the property.
