Lands which cannot be the subject of a registered construction lien

Generally speaking all land which is the subject of a construction improvement can be made subject to a lien under the Ontario Construction Lien Act. There are exceptions however.

Federal lands

As a matter of jurisdiction, the Ontario Construction Lien Act has no application to lands owned by the federal crown or a federal crown agency such as the building of an Armed Forces Base. Therefore, there is no right to assert any a construction lien against federal interests.

It is useful to note, however, that most federal projects require the builder to obtain and post a labor and material payment bond. The typical federal bond is different from and broader than the typical labor and material payment bond that may be found in provincial circumstances. Typically a provincial labor and material point payment bond only protects those having direct contracts with the principle usually the Gen. Contractor. These would be first-tier subcontractors as eligible claimants under the bond . Sub- sub-contractors or material suppliers to a sub-contractor are not eligible claimants under provincial bond. The typical federal bond however extends protection to third tier sub- subcontractors. In other words, that class of people who have contracts directly with a subcontractor[ subs to the subcontractor].

It is important for the security of subcontractors and sub- sub-contractors that an inquiry be made at the earliest opportunity from the Federal crown agency as to the existence of the project labor, material payment bond and obtain a copy of the bond . While the contractor also has the bond, it may not always be co-operative in providing details of the bond. Generally the owner is willing to do so as the bond was required by the owner to protect the project and those working on it.

Ontario Provincial Crown lands, public streets or highways owned by municipality or railway right-of-way

The interests of the Ontario provincial crown, including provincial Crown agencies, boards, commissions, railways, public utilities, or community colleges do not require or permit the registration of the claim for Lien against the lands.

In the circumstances, a lien is ,instead of registration ,preserved by delivering a copy of the Claim for Lien, accompanied with the traditional affidavit of verification to the office prescribed for the particular Crown Agency for whom the construction improvement was carried out .

Failure to serve the claim on the crown agency is fatal. Care must be taken to determine whether the Owner is a crown agency. It is not necessarily intuitive. For example, the legislation governing community colleges designates each community college as a crown agency. Therefore an attempt to register a lien against a community college is a nullity and requires instead the delivery of the claim for Lien and affidavit of verification to the designated official of the community college. Consideration can be given to the Crown Agency Act to determine whether the owner is a crown agency or by addressing common law principles setting out the indicia and extent of the entity as an agent of the crown. If there is any doubt ,the safest course is to both register the lien against the land and deliver a copy of the claim for Lien and affidavit of verification. If you do both one of them will be right.

In addition to the Provincial Crown, public streets or highways owned by a municipality or railway rights-of-way can not be the subject of a registered claim for Lien and require delivery of a copy of the claim for Lien and affidavit of verification to the relevant representative such as the clerk of the municipality- [check section 34 of the Construction Lien Act].

Where the lien does not attach in the above circumstances, there is still protection in that the delivery of the claim for Lien and affidavit of verification constitutes a charge on the holdbacks required to be retained under the act. Even though there is no lien and the lands cannot be sold, the relevant Crown Agency or Municipality must still retain, and be liable for, the usual lien holdbacks.