Timelines under the Construction Act: Perfection

Despite how it sounds, perfection under the Construction Act (“CLA”) and other similar acts such as Ontario’s Personal Property Security Act, is not related to perfectionism. Instead, perfection entails the procedural step of “validating any legal document or interest by properly executing it and then filing it with the correct public authority.”[1]

Under the CLA, the purpose of perfection is ultimately to prevent claimants from encumbering title and “sitting” on their lien rights. Think back to the ultimate purpose behind the CLA: to encourage and provide an expedited resolution method for construction disputes. Thus, as will be described in greater detail below, perfection declares the claimant’s intention to exercise its lien rights and seek reparations for whatever damages it claims.

Procedurally, perfection arises after preservation of lien rights. In fact, according to section 36(1) of the CLA, a lien may not be perfected unless it is preserved.[2]

Section 36(3) outlines the actual procedure for perfect, separating claims into the types where the lien attaches to the premises and where the lien does not. Recall that, as alluded to in previous posts, a lien does not attach to the interest of the Crown in a premises.[3] Therefore, a claimant would have to follow different procedure depending on the type of subject property in dispute.

For our purposes, consider a lien that attaches to the subject property. In such a case, a claimant perfects its preserved lien when it commences an action to enforce the lien and registers a Certificate of Action against the title of the premises.[4] However, where the owner or general contractor is aware of the Claim for Lien and expeditiously brings a Motion to Vacate same (to be discussed in later weeks), the claimant need only commence an action to enforce.[5]

Similarly to preservation, perfection requires a strict time period for compliance, failure of which could result in the potential expiry of the preserved lien. Under the old CLA, a claimant had to perfect the Claim for Lien prior to the end of the forty-five (45) day period next following the last day, under section 31, on which the lien could have been preserved.[6] After July 1, 2018, this time period has been extended to ninety (90) days.

Consider last week’s hypothetical example with the materials supplier whose contract was terminated on August 31, 2018. Suppose that claimant complied with the requirements for preservation on October 15, 2018. Recall that the material supplier had until October 30, 2018 to preserve its lien interest.

An interesting point that brings about confusion with many Construction Law practitioners concerns determining the actual last date for perfection. As our hypothetical material supplier was represented by a zealous and experienced lawyer, such as the ones you will find in our firm, its Claim for Lien was registered prior to the last date on which such interest had to be preserved. However, this does not now mean that the material supplier has ninety days from October 15, 2018 to perfect. As clearly spelled out in section 36(2), the claimant has until the end of the ninety-day period next following the last date on which the lien could have been preserved.

As such, even where a potential lien claimant would expeditiously preserve its lien rights, such zeal would not prejudice its rights to still rely on the total time provided by the CLA to perfect its already preserved lien rights. Therefore, in the case of our hypothetical material supplier, the last date to perfect its Claim for Lien would fall on January 28, 2019, regardless of when the lien was first preserved.

Next week we will discuss other important timelines under the CLA.

Until next week!  

[1] Black’s Law Dictionary, online (October 2018), sub verbo “perfection”.

[2] Construction Act, R.S.O. 1990, c. C.30, as amended, s. 36(1) [CLA].

[3] Ibid, s. 16(1), s. 16(3).

[4] Ibid, s. 36(3)(a).

[5] Ibid.

[6] Ibid, s. 36(2).

The foregoing is for informational purposes only, and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of Sutherland Law's lawyers by email or telephone.