Timelines under the Construction Act: Preservation - Part I

 

Timing is a crucial component of any action commenced or any rights provided under the Construction Act (“CLA”). As indicated in earlier weeks, one of the rationales in legislating the CLA was the implementation of an expedited system of resolution for matters involving the Construction Industry.

Even in cases of civil litigation with voluminous amounts of parties, such proceedings rarely affect individuals who are not directly named or otherwise involved. Actions under the CLA differ with that respect – an ongoing lien dispute often brings a termination or pause of work on whatever project or property in dispute. Although such a pause may not directly affect the masses, for example, on work done on residential unit, the effect and inconvenience caused during road repair or large public projects may affect hundreds, if not thousands, of citizens who would otherwise have no relation to the dispute.

Accordingly, it is in everyone’s best interest that lien proceedings are resolved as soon as possible. In fact, section 67 of the former CLA and section 50(3) of the current CLA further mandate that “the procedure in an action [under the CLA] shall be as far as possible of a summary character, having regard to the amount and nature of the liens in question.”[1] Accordingly, the CLA sets out strict, truncated time-periods and limitations for certain processes to occur throughout the process of a lien action. In the coming weeks, we will discuss the various time periods that govern procedures under the CLA, starting with the requirements for “preservation” of lien rights.

Preservation

In order for a lien to attach as a security interest in a real property, the claimant must first preserve, and subsequently perfect said lien. Although there is no direct definition of preservation in the CLA, section 34 of the CLA outlines the process that a party must undergo to preserve its lien rights. Under section 34 (1),

A lien may be preserved during the supplying of services or materials or at any time before it expires,

(a) where the lien attaches to the premises, by the registration in the proper land registry office of a claim for lien on the title of the premises in accordance with this Part; and

(b) where the lien does not attach to the premises, by giving to the owner a copy of the claim for lien.[2] 

For our purposes, it is only necessary to note that the remainder of section 34 differentiates instances where a lien does and does not attach to the subject property. Section 34 (5) provides further clarity and spells out the various contents of any Claim for Lien.

Effectively, preservation entails the lien claimant and/or its representative to complete and register a Claim for Lien, which is a document indicating the details surrounding the lien such as:

  • the name of the entity for whom service or materials were provided;

  • the timeframe for the provision said service or materials;

  • a short description of the services or materials provided;

  • the contract or subcontract price;

  • the amount claimed in respect of services or materials that have been supplied; and

  • the legal description of the property to which services or materials were supplied. This step often involves pulling an Abstract of Title to ascertain the specific Property Index Number, a factor the smallest error in which could void a lien.[3]

Once a Claim for Lien has been registered (if applicable) and/or served, a lien claimant is said to have “preserved” its lien rights.

Tune in next week to learn more about the strict limitation period with respect to preservation, and the recent changes to same in the new CLA.

Until next week! 

[1] Construction Act (formerly Construction Lien Act), R.S.O. 1990, c. C.30, s. 50(3) as amended pursuant to 2017, c. 24, s. 39(2).

[2] Ibid, s. 34(1).

[3] Ibid, s.34 (5)(a)-(e).

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.

 
Sutherland Law Staff Writer