Overview Of A Construction Lien In Ontario Under The Construction Act

One of the main purposes of the Construction Act is to protect parties who make improvements to the land but do not have a contract with the landowner. The Act does this by requiring each party to retain 10% of the payments it makes to the party below them in the construction pyramid. As an unpaid party, you can lien the property for the value of the unpaid work you have supplied to the property.

Construction lien holdbacks

A lien protects you by giving you access to the 10% holdback.

Holdback funds held by the owner are generally shared on a proportionate basis by you and other lien claimants. Recovery will vary based on the holdback amount and the amount of the liens. For example, if the holdback is $1 million, and there are three liens of $1 million each, you and the other lien claimants should each recover $333,333, that being one-third of the $1 million holdback. The lien will not help you recover your unpaid balance of $666,667.