Removing Property Liens When Buying or Selling
Published on 29 August 2022, 07:22:56 AM
You like the home, but a nasty lien on property has you second guessing your offer.
Can you remove it or are you stuck paying it yourself?
Here’s how to remove a lien from your property in Ontario. Hint: finding a lien on property is more common than you think.
Quick Read
Who can put a lien on your house in Ontario
How to remove a lien from your property in Ontario
What is a Lien?
Liens and hold-back rights are protections against non-payment for goods or services, like materials supplied to renovate a home. But they can go further than that.
Who Can File Property Liens in Ontario
Construction Liens
Building or renovating your home can be exhilarating, but if your construction contract goes awry, expect to be served with a construction lien.
Contractors, subcontractors, or building suppliers who claim you failed to pay for goods or services they provided have a right to place construction liens on a home or land until the claim is settled.
Regardless of whether you paid a contractor or subcontractor, the Construction Act gives labour and material suppliers the right to go after you for the actual amount of services or materials they supplied for “an improvement in land”. Claimants have up to 45 days from substantial completion of the general construction project to file a claim.
Mortgage Liens
Mortgage lenders take every precaution to protect loans they make to potential new build home buyers or resale home purchasers.
That includes requiring new build buyers to hold back a portion of their final payment until after a home passes inspection and subcontractors are paid. If you are buying a resale home, lenders can refuse a mortgage if a lien is found or delay a property sale until the lien is paid.
Likewise, sellers who default on payment of mortgage interest, principal, or property taxes, could find their right to sell their home denied by an Ontario court. Your lender may send you a demand notice to pay the mortgage in full. Failure to settle could result in being taken to court to force the mortgage into default and sell your home to recoup the lender’s investment.
Unless you can find a new lender on short notice, your right to sell your home can be blocked.
Special Assessments or Condominium Fees
Buying a condo gets complicated if the owner is behind on condominium fees or neglected to pay special assessments. Condo corporations can register property liens against the title and hold up a sale until outstanding charges are resolved.
Condo corporations can register liens against the title to the property and hold up a sale until outstanding charges are resolved. Since most condo units are mortgaged, lenders typically pay the lien and pursue the owner for costs, plus interest and legal fees. A unit for sale by court order is a sign the owner may have declined to pay the lien and been forced into default when their mortgage subsequently came due in full.
Resolving Property Liens in Ontario
Resolving property liens on a house could be as simple as the owner agreeing to pay for labour or material a contractor or subcontractor shorted a third party on. If you’re adamant the contractor, subcontractor, or other party who placed the lien is wrong, you have options:
- Sending a demand letter through a lawyer.
- Hiring a mediator to work out a settlement.
- Requesting a legally binding decision from the Ontario Dispute Adjudication for Construction Contracts authority (ADACC).
- For disputes under $35,000, suing in Ontario Small Claims Court.
- Paying the amount of the lien, plus 25% of court costs, to a court and pursuing litigation later — that allows a mortgage lender to proceed with financing, since their exposure to potential financial risk is discharged.
- Making a statement of defence or bringing your own legal claim.
- Or adding a “third party” to a legal claim on the grounds they contributed to the lien occurring — but only if the court decides it won’t delay or complicate settling the dispute.
Why You Need a Real Estate Lawyer
Your Axess Law real estate attorney reviews your offer to purchase and advises you how to close the deal without expensive legal bills or hassles. We help you make the home you want your own by removing a lien on property when the title is registered.
Transfer Title to Property
Ontario homes or properties you offer to buy or sell that have outstanding liens may be ineligible for title transfers. You cannot take possession of a property even if you have already paid a real estate deposit, or obtain or discharge a mortgage, until financial disputes are resolved. That could add significant delays to purchasing a home you desire or selling a property you own.
Access Law Services
Axess Law answers your legal questions if a lien is discovered during a property title search. We negotiate with the seller’s lawyer to see if they will pay or, if you are the buyer, explain title delays to your mortgage lender. It’s up to you if you want to go ahead or withdraw altogether from the agreement of purchase and sale.
Get Legal Referrals
You do have potential legal recourse against a seller if they misrepresented the property title as free and clear. We can refer you to trusted legal partners who can advise you on how to dispute a lien on your property in Ontario if your deal collapses.
Affordable Real Estate Lawyers, Anywhere You Are
Access lawyers for less in the Greater Toronto Area, Ottawa, or anywhere in Ontario when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it.
Find a real estate lawyer in Ontario.
Make Phone or Online Appointments
For remote online video conference call with a real estate lawyer anywhere in Ontario, call Axess Law. We can meet with you online or at any of our convenient Greater Toronto Area or Ottawa law offices. We have lawyers near you, with onsite parking and easy transit access. Book day or evening appointments by dialing toll free to 1-877-402-4277 or in Toronto, call our 647-479-0118 lawyer line. Make your own appointments online with our easy web booking form.
Click here to learn more about our real estate law services.
