The construction and real estate industries have changed immeasurably in the last two decades. Given that the Ontario Construction Lien Act (the “CLA”) has remained virtually unchanged for more than 20 years, some might suggest that some renovations to the legislation are long overdue. Some might say that…I’m just sayin’…
With the CLA now almost old enough to buy itself a beer south of the border, the Ontario Legislature recently passed the Open for Business Act, 2010, which includes several changes to the CLA. One of these changes is already in effect and the other three are expected to come into effect in the near future.
While, in the grand scheme of the construction industry the amendments are far from game changers, they will have a real impact on projects where there is equipment being supplied and installed and on condominium developments.
Definition of “improvement”
In 2007, the Court of Appeal upheld a trial judge’s ruling that the transporter and installer of a 100,000 square-foot, 500,000 ton automotive assembly line (built off-site, disassembled, transported, reassembled on-site, and fastened to the building with 2,000 to 3,000 bolts) did not have lien rights, because the installation of the assembly line did not fall within the definition of an “improvement”! The Court of Appeal refused to interfere with the trial judge’s finding that the assembly line was “portable”. I’m not kidding, either. Really, “portable” – that’s what the judge decided.1
The construction industry (and more than a lawyer or two) was shocked by the Court’s interpretation and so too, it seems, did the Ontario Legislature disapprove because the definition of “improvement” at section 1 of the CLA has (albeit three years later) been amended and now expressly includes the installation of industrial, mechanical, electrical or other equipment on the land where the equipment is essential to the normal or intended use of the land.
It will be very interesting (for construction law nerds like myself, anyway) to see how far the courts will go in extending lien rights to installed equipment.
This amendment came into force in October, 2010.
Under this amendment (new section 33.1 of the CLA), condominium developers will be required to publish notice of their intention to register the condominium declaration in accordance with the Condominium Act in a construction trade newspaper (the Daily Commercial News) five to fifteen days prior to registration.
This amendment will provide unpaid persons having liens notice of the pending registration of the condominium declaration so that they can preserve their lien rights before the lands and premises are legally divided into separate condominium units and title is transferred to homebuyers.
Prior to the registration of the declaration, the condominium improvement can be liened in the normal manner, even if the work of the person having a lien is to parts of the project which, after registration of the declaration, will be common elements. This amendment will provide an opportunity to avoid the much more expensive and time consuming requirement of liening the common elements of a condominium after the declaration has been registered.
This amendment is not yet in effect.
Affidavit of Verification
Prior to these amendments (to sections 34 and 40(1) of the CLA), a claim for lien had to be verified by an Affidavit of Verification which was typically sworn by the lien claimant. In an effort to keep pace (or at least not fall out of sight) with the new(ish) electronic registration system for land titles documents, verifying a claim for lien by Affidavit will no longer be required.
Also, instead of cross-examining the deponent of the Affidavit of Verification, the lien claimant, the agent or assignee of the lien claimant, or a trustee of the workers’ trust fund (as the case may be) will be subject to cross examination.
These amendments are not yet in effect.
Under these amendments (to sections 44(9) and 47(2) of the CLA), a lien claimant whose lien is sheltered under a certificate of action that has been vacated from title by Court Order will still be able to proceed with an action to enforce its sheltered lien as if the Order to vacate had not been made.
These amendments were introduced to facilitate the vacating of liens by Court Order while, at the same time, protecting the rights of sheltered lien claimants.
These amendments are not yet in effect.