Construction companies, contractors and subcontractors work under a great deal of risk, relying on many different groups of people to supply labour and materials to a certain degree of quality to keep a project going. Because of the involved risk, they are protected under the Construction Lien Act (the “CLA”) if there is a breakdown in cooperation.
What is a Construction Lien in the Commercial Field?
A construction lien is a formal document that protects the interests of contractors, suppliers, and some professionals in the construction arena.
Construction liens are used if the property owner fails to pay during or after a contract is complete. There are specific requirements that a contractor or supplier must meet to file a lien.
Using a Construction Lien To Protect Your Interests
Construction liens, like the construction field itself, can be very complicated. It’s essential to contact a lawyer who can quickly and efficiently work through the details and do what must be done, salvaging your interests and ensuring that your losses are minimized.
A lien-related dispute may escalate over many issues, including:
- Product deficiency
- Quality of work
- Delays in payment
- Disagreements over responsibility
- Breach of trust claims, when money that is paid to a contractor to pay a subcontractor is used for a different purpose
- If a contractor or subcontractor has a claim for a lien, it must enforce those lien rights within strictly specified time limits, or risk losing them.
Alternatives To Liens
If you miss the deadline for registering a lien, there are still options open to you:
Breach of trust claim
Since all amounts received for a project are supposed to be for the benefit of the project, if any funds are used for any other purpose you may be able to hold the persons in control of the corporation personally liable for the breach of trust and get compensation from them.
Labour and material payment bond
Many general contractors for large scale commercial, government and institutional projects have a bond with an insurance company, to protect the owner against possible claims. If your project has a bond, you may be able to file a lawsuit for compensation.
If neither of these options applies, a lawsuit may be your only option. This may prove worthless if your debtor is insolvent and you cannot personally pursue the directors of the debtor company.
If you’re based in Toronto, Azevedo & Nelson are top Toronto Construction Lien Lawyers. They can help you understand the applicable rules, avoid or file a construction lien, or mitigate risks.
Our Toronto construction lien lawyers are familiar with the practical realities of construction-related litigation and contractor disputes in the Greater Toronto Area. We represent builders, general contractors, subcontractors and material suppliers, and we know how important it is to get you back to business as soon as possible.