The Open for Business Act 2010, (Ontario) which received Royal Assent on October 25, 2010 contained amendments to the Construction Lien Act (Ontario) (“CLA”); many of which came into effect on July 1, 2011. These amendments include notice requirements for land intended to be registered under the Condominium Act (Ontario) (“Condo Act”), the removal of the requirement for an affidavit of verification and the facilitation of vacating construction liens and certificates of actions from property records, while protecting the rights of sheltered lien claimants.
Section 33.1 of the CLA requires an owner1 of land, that is intended to be registered under the Condo Act, to publish notice (“Notice”) of the intended registration in a Construction Trade Newspaper, at least 5 days and not more than 15 days, excluding Saturdays and holidays, before submitting the condominium description for approval under the Condo Act. The Notice must be in the prescribed form and include the name and address of the owner, description of the property and the names and addresses of any contractors who, in the owner's knowledge, have supplied materials or services during the 90 days before the description is submitted for approval.
The consequence of an owner not publishing this Notice is that the owner will be liable to any lien claimants who suffer damages as a result of the owner's failure to notify.
Once a condominium is registered and the individual units have been created as separate parcels on the Ontario Land Registration System, a lien claimant can no longer conduct a search and lien the property as a whole, except by searching each unit, and registering a lien against each unit in that particular condominium. Such searches and registrations can be quite costly. By having the Notice published before title of the individual condominium unit is registered and passed on to a buyer, it enables a contractor/lien claimant to become aware of the intended registration and to register a lien on the property as a whole, if it deems it necessary.
Accordingly, contractors/potential lien claimants should be reviewing the Construction Trade Newspapers to search for Notices of Intention and act accordingly.
Prior to the 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. Now the verification of the claim for lien by affidavit is no longer required. This step eliminated a redundancy because the CLA provided that a claim for lien can be electronically registered and because Courts have held that the electronic statement in the electronic form was sufficient to satisfy the affidavit requirements.
That being said, since an affidavit of verification is no longer required, those persons who may be cross examined are expanded to include the deponent of the affidavit, the lien claimant, the agent or assignee of the lien claimant or the trustee of the workers’ trust fund.
Accordingly, affiants should be aware of the possibility of being cross-examined.
The last amendments relate to sections 44 and 47 of the CLA. A lien claimant's right expires if it is not preserved and perfected within the time required in accordance with the CLA. (Sheltering is an exception to the preservation and perfection rules.) A lien may be properly “perfected” by allowing the lien claimant to perfect its preserved claim by sheltering under an action commenced by another lien claimant (“the other lien”).
Historically an issue arose when the other lien was vacated by Court Order, raising questions as to whether the sheltered lien status had changed. In order to protect the rights of a sheltering lien claimant the CLA has been amended to permit a sheltering lien claimant to proceed with an action to enforce its lien, as though the Order to vacate on the other lien had not been made.
Accordingly, sheltered liens may continue with some certainty as to their status.