The Ontario Government has introduced legislation that will extend the time limit allowed to file a construction lien if invoices remain unpaid.
Assuming the legislation becomes law, the new time limit to file a construction lien in Ontario will increase from the current 45 days to 90 days. The time limit to sue in court to enforce the lien will also increase from 45 to 90 days. The Attorney General’s office says it expects the new regulations to take effect in 2018.
In addition to giving more time to a creditor to collect their construction-related debt before action has to be taken, creditors will also be able to take action in Small Claims Court to enforce their lien up to $25,000. This is an improvement from currently having to file a construction lien enforcement claim in Superior Court.
Notes about Construction Liens:
Project Owners, contractors and sub-contractors are each only responsible for a 10 percent holdback on the cost of their part of the project, which means a lien holder may ultimately only receive 10 percent of the total amount they are owed. A Construction Lien can still be a useful tool, and the act of filing a lien can sometimes prompt full payment.
Filing a lien does not guarantee payment of the construction debt in any amount, and enforcement of a lien against the project owner or debtor can take years or may not be possible at all depending on the financial circumstances of the debtor, contractor or the project owner.
If a supplier is having problems getting paid on time and decides it is worthwhile to file a construction lien, it is always better to act well before the time to file a lien expires to allow for the necessary searches, notices, lien preparation and potential court filing delays.
With the extra timelines available, a supplier who is having problems getting paid, can consider the services of a professional collection agent along with using the tools of the construction lien process when it is worthwhile to do so.