A lien on a home is a guarantee that helps lenders, contractors, and other people recover overdue debt. You can also offer the right to lien voluntarily under specific conditions.
Implementation of a lien on a home can be scary because of the sudden change in possession of a property. This is why knowing what is a lien on property and who can put a lien on your house in Ontario can prepare you.
So let’s look at everything you must know about this legal practice.
What Is A Lien On A Home?
People such as first-time home buyers wonder what is a lien on a home due to a lack of real-estate knowledge. A lien on property is a legal claim that a specific party can place on your home or other assets to recover a debt.
If you owe a lender such as a bank and don’t pay them on time, they can place a lien on property you own. This will give them exclusive rights to your home and offer them security.
A lien can also be placed voluntarily in cases where you set up your home as collateral for a loan or other purposes.
How Does Putting A Lien On A Property Ontario Work?
Before learning who can put a lien on your house in Ontario, you must understand how putting a lien on a property Ontario works.
Voluntary Lien On Property
A voluntary lien is a legal claim that you offer another party yourself. For example, you may be taking a loan from a third-party creditor. So you can agree to a voluntary lien for payment delays to offer them security.
The other party may also make you sign a document that proves you have given them the right of lien on your property in Ontario.
Involuntary Lien On Property
An involuntary lien is a legal claim that a third party can place on your property without your consent. Such type of lien can only be placed if the other party has received court approval.
For example, a creditor may go to court and prove that you haven’t paid them according to the loan timeline. In such a case, the court will offer the right of lien to the creditor to help them recover the debt.
What Happens When A Lien Is Placed On Your Home?
Many people know what is a lien on a home, but they don’t know what exactly happens during such a claim. The first thing you should expect upon placement of a lien on your property is a notification.
You may receive a court order stating the right to lien has been given to the creditor. Upon notification, foreclosure of your house can occur immediately.
The creditor can seize your home and may evict you to ensure you pay the debt in whole. If you still cannot make the payment to recover your home, the creditor can sell it to get back the amount they lent you.
Who Can Put A Lien On Your House In Ontario?
Now that you know what is a lien on a home, you may be wondering who can put a lien on your house in Ontario. Here are the most common people or entities that can place a lien on property:
1. Lending Facilities
Any lending facility that you have borrowed money from can place a lien on your house. These may include:
- Banks
- Third-party creditors
- Mortgage lenders
When a lending facility imposes a lien on property, such a claim is called a real estate lien. The main reason behind the claim is that you owe a debt to the facility.
For example, you may have borrowed money from a bank to pay your mortgage. The institution may have set you on an installment plan to repay them the money.
If you miss payment deadlines consecutively, the facility will get the right to put a real estate lien on your property.
2. Contractors And Suppliers
People who have contributed towards constructing or renovating your home can receive the right to a lien by a court order. This can happen in cases where a contractor is owed money for building your home.
Suppliers can also file a claim in court of overdue payments to get the right to lien. These liens are also known as mechanics liens.
A prime example of such a claim is when a roofing company files a request for the right to put a lien on your property because you’re refusing to pay the company.
Typically, a contractor must file a claim within 90 days from the date a contract ends. They can also place a lien if the Certificate of Substantial Performance has been issued but you still haven’t cleared the dues of the contractor or supplier.
3. Condominium Corporation
Those who know what is a lien on a home usually think that this claim is only applicable to houses and not condominiums. However, that is not true.
Your condominium corporation can also get the right to place a lien on your property. This can happen when you have overdue:
- Common expenses
- Fines due to late payments
- Special assessment condo
Common expenses are annual charges that every condo owner has to pay to their condominium corporation for the repair of common elements. If you don’t pay this charge, the corporation can penalize you with fines or put a lien on your property.
Similarly, a special assessment condo is an additional charge that may be imposed by a condominium corporation in a specific year. Any condo owner who doesn’t pay this fee can suffer from a lien on their condo unit.
4. Canada Revenue Agency (CRA)
The CRA is an agency that is responsible for administering taxes and maintaining compliance. It is the primary federal taxing authority in Canada. This is why the CRA can place a lien on your property.
They may notify you about the potential lien and implement it promptly. Many homeowners don’t realize their property is on lien by the CRA until they attempt to sell their home.
However, putting a lien on a property is always the last resort by the CRA. The agency will try to collect unpaid taxes through other methods first. For example, they may send you written warnings about overdue payments.
The CRA may also freeze your bank account or deduct taxes from your wages directly. If these methods are not adequate for collecting the tax debt, the agency will seize your home by using their right to lien.
So you must never take your unpaid taxes lightly, especially after receiving a warning from the CRA. The agency can sell your home promptly to recover pending debt, so you may not have the time to remove the lien from your house.
5. Municipal Government
Whether you live in Ontario or another Canadian province, paying taxes is a must. Any person who doesn’t pay property taxes can suffer from consequences such as fines, lien on property, and more.
Typically, the municipality of Ontario can place a lien on your home if you haven’t cleared taxes in the past two years. Such a claim is called a tax lien.
The government agency may give you some time to pay off the debt after seizing your home. They may also put your house on sale directly to recover the amount of uncleared taxes.
6. Custodial Parent
One of the people who can put a lien on your house in Ontario is a custodial parent. You may have separated from your spouse or undergone a divorce with your partner getting child custody.
The court may also have ordered you to pay a specific amount in child support monthly to your spouse. If you delay these payments continuously or refuse to pay despite the court order, your spouse can place a lien on your property to collect the child support debt.
In these cases, the parent who has custody of the child is called the custodial parent. However, the custodial parent cannot place a lien on your property on their own.
The Family Responsibility Office (FRO) is the entity that can put a lien on your property on behalf of the custodial parent. If you don’t own a home, the FRO can put a lien on another asset that you own such as a vehicle, boat, or more.
This agency can cancel your passport to force you to pay child support payments. You also cannot sell your property that has a lien on it without clearing the debt.
Related: https://athenalawoffice.com/blog/family-responsibility-office-payments/
Property Lien Search By Address Explained
When an agency is putting a lien on a property, they have to register the claim at the land registry office of Ontario. This will ensure the lien is legal and will appear in title searches.
The property lien search by address is how people can find out which house on sale has a lien on it. This registration ensures a debtor cannot sell their property without clearing their dues.
Sometimes, a lien is also placed promptly so the property owners don’t realize their home has been seized. In such cases, a person can use a property lien search by address to check whether their house has a lien on it.
You can perform a property lien search by address check online or by contacting your county clerk’s office.
How Much Does It Cost To Remove A Lien On Property?
The cost to remove a lien from your property will depend on the debt you owe to a specific party. Typically, you must pay the entire debt amount to the lienholder.
When the debt is clear, the lien will be removed promptly. If your financial situation is not good, you may contact the lienholder to negotiate a reduced amount to remove the lien.
In some cases, you may not have to pay anything to get the lien removed. This is only possible if the claim was implemented due to a mistake.
You will have to dispute the lien in court to get a legal order for lien removal. Of course, you must prove that all your debt was already clear and that the lien was placed due to miscommunication or other errors.
Can Someone Put A Lien On My House Without Me Knowing?
Someone can put a lien on your house without you knowing immediately. For example, a lender may request a court order for a lien without letting you know.
However, you will be notified when a court gives the right to lien to a lender. So while you may not know about a pending lien, you will always be informed once the court has approved the claim.
Sometimes, notifications by the court may also get delayed due to unforeseen circumstances. This means you may not know your house is on lien until you receive the order later or when you perform a title search of your property.
Can A House Be Sold With A Lien On It?
You cannot sell a house with an involuntary lien on it because the claim will show up in title searches. The land registry office (LRO) will also know about the lien.
This means the LRO will not approve the transfer of ownership when you try to sell your house with a lien. You must clear all the debt you owe the lienholder to ensure the court order is removed.
Once the lien has been removed, you can sell the property and transfer ownership easily.
Meanwhile, it is possible to sell your house if it has a voluntary lien. If you have a mortgage lien, you can sell your property to pay off the remaining debt and transfer ownership immediately as the lien is removed.
FAQs
What Is The Most Common Type Of Lien?
A bank lien is the most common type of lien because most people take loans from banks while keeping their house as collateral.
What Is The Right Of Lien?
The right of lien is the authority that allows a person or entity to seize a debtor’s property or assets with a court order.
How Long Does A Lien Stay On Your Property In Ontario?
The time a lien stays on a property depends on its type. Contractors only have 90 days after the construction work is complete to place a lien for overdue payments, after which they lose their right of lien. Meanwhile, tax liens stay on a property until the debt is paid.
How Long Does It Take To Remove A Lien On Property?
The registry office will remove the lien on your property within one to two days of debt clearance.
Call Athena Law Office Today To Handle A Lien On Property Lawfully
The answer to what is a lien on a home is simple. It is a legal claim that specific entities can put on a property in Ontario. You may also have received a notice of lien today and may not know what to do next.
If so, you don’t have to worry. You can get in touch with us immediately to dispute the lien on property or negotiate a settlement with the lienholder.
Author Profile
- Barnett Law is a trusted and knowledgeable lawyer in Scarborough. Her expertise spans real estate law, family law, adoptions and fertility law. A lawyer by profession and a humanitarian by heart, Athena Narsingh Barnett wants to help people become more familiar with the legal system and be well-informed to make important legal decisions.
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