Canada: Significant Proposed Changes To Ontario's Construction Lien Act


The Ontario government recently released legislation (Bill 142 – An Act to amend the Construction Lien Act) that, when passed, will mean major changes to the Construction Lien Act and the construction industry in Ontario. The draft legislation is the culmination of a review that the Ministry of the Attorney General and the Ministry of Economic Development, Employment and Infrastructure began over two years ago, in February 2015. Bill 142 received first reading on May 31, 2017. The last major revision to construction lien legislation was the introduction of the current Construction Lien Act in 1983.

Highlights of Proposed Changes

The proposed changes are numerous and include:

  • renaming the Construction Lien Act, the "Construction Act".
  • changing the monetary thresholds at which a contract is considered "substantially performed" and "completed."
  • specifying examples of "minor irregularities" that will not automatically invalidate a certificate, declaration or claim for lien, including a minor error or irregularity in the name of an owner or of a person for whom services or materials were supplied, or a minor error or irregularity in the legal description of a premises.
  • making landlords' interests subject to a lien for work on the tenancy to the extent of 10% where the lease agreement provides for payment of all or part of the improvement, effectively making the landlord responsible to retain the holdback out of any tenant improvement allowance.
  • making landlords subject to the obligation to provide information under section 39.
  • introducing a new system of payment rules intended to give more certainty to parties regarding the timing of payments. As proposed, the owner and the general contractor can agree to a schedule for the general contractor to submit its invoices to the owner. (In the absence of an agreement, the general contractor would be required to submit invoices on a monthly basis.) Once the invoice is received by the owner, payment would have to be made within 28 days and once payment is received by the general contractor, the general contractor would be required to pay its subcontractors who supplied services or materials included in the invoice within 7 days (and so on and so forth until all parties supplying materials or services to the project have been paid). If the owner disputes the amount of the general contractor's invoice, or the quality of the work, within 14 days of receiving the invoice, it can deliver a "notice of non-payment" (and those parties further down the chain can deliver a "notice of non-payment" within 7 days). Mandatory interest would be payable on late payments. This new payment system will only apply to payments made under contracts entered into on or after the amendments come into effect.
  • creating new record-keeping requirements for trustees regarding trust funds (and confirming that trust funds for multiple trusts may be deposited into a single bank account, provided that the proper records are maintained for each trust).
  • creating a new interim adjudication process to complement the new prompt payment provisions. The adjudication process is commenced by one party delivering a written notice of adjudication. Under this new process, an interim binding decision would be made by an "adjudicator" within approximately 6 weeks of delivery of a notice of adjudication (subject to the parties' agreement for an extension). Adjudicators have to be qualified by a designated entity and listed in a adjudicator registry. The adjudicator's determination will be binding on the parties until the matter is determined by a court or by way of arbitration (leaving open the possibility of a different ultimate result). Amounts ordered to be paid by an adjudicator must be paid within 10 days, or will be subject to interest and a contractor or subcontractor may suspend further work until the principal and any interest are paid. The successful party may also apply to the court for enforcement of the adjudicator's determination. This interim adjudication process will only apply to contracts and subcontracts entered into on or after the amendments come into effect.
  • extending the deadline to preserve a construction lien from 45 days to 60 days and to perfect a construction lien from 45 days to 90 days.
  • providing that holdbacks may be retained in the form of a letter of credit or bond, in the prescribed forms, instead of in the form of funds.
  • allowing condominium owners to remove/vacate liens that attach to the common elements of the building by posting their proportionate share of the common elements as opposed to having to post security for the full value of the lien.
  • requiring holdback funds to be paid as soon as the time for registering construction liens has expired or all liens have been satisfied, discharged or otherwise provided for under the Act (unless a notice is published within a particular period of time specifying the amount of the holdback that the payer refuses to pay) and permitting the payment of accrued holdback on an annual or phased basis, where certain conditions are met (including certain contractual provisions).
  • allowing the referral of construction lien claims under $25,000 to the Small Claims Court.
  • generally bringing the procedure to prosecute a lien action in line with the prosecution of other types of actions under the Rules of Civil Procedure, while maintaining the prescription that lien actions shall be as far as possible summary in nature. For example, leave to issue a third party claim would no longer be required and the provisions regarding carriage of a lien action and settlement meetings would be deleted.
  • increasing the amount required to be posted as security for costs to vacate a claim for lien (from the lesser of $50,000 or 25% of the amount claimed in the claim for lien to the lesser of $250,000 or 25% of the amount claimed in the claim for lien).
  • providing that contractors in a "public contract" (defined as a contract with the Crown, a municipality or a broader public sector organization) over a threshold contract price are required to provide a labour and material payment bond and a performance bond.

For the most part, the non-substantive (procedural) amendments will come into force on the day the Bill receives Royal Assent. The substantive amendments will come into force on proclamation of the Lieutenant General. The Attorney General has indicated that the legislation should come into effect in 2018.

Over the past 35 years, we have seen many changes in the construction industry, including the emergence of large infrastructure projects and private-public partnerships. At the same time, the number of contractual claims have increased as have issues relating to payment for the labour, services and materials supplied by contractors and subcontractors. The proposed legislation is intended to address many of these issues and to provide a revised framework in which these issues can be dealt with by both the parties involved in construction and the Courts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions