A lien is a legal claim or right against a property, typically used as security to ensure the payment of a debt. In Ontario, property liens are common in real estate transactions and can have significant implications for homeowners. Whether you’re a homeowner or a potential buyer, understanding the nuances of liens is essential to avoid legal pitfalls. This blog post will explain how long a lien stays on your house in Ontario and offer insights into its effects on real estate transactions.
What is a Lien in Real Estate Law?
A lien is a legal tool used in real estate law to secure a creditor’s interest in a debtor’s property. This legal right ensures that the creditor has a claim on the property if the debt is not paid. For example, a mortgage is a lien, as it allows the lender to take possession of the property if the borrower fails to make mortgage payments.
Different types of liens can affect properties, such as construction liens (also known as builder’s liens), tax liens, and judgment liens. The laws surrounding liens are governed by Ontario’s Construction Act, which dictates the conditions under which a lien can be placed, enforced, and removed.
How Long Does a Lien Stay on Your House in Ontario?
The duration of a lien on your house in Ontario depends on the type of lien. Below, we will discuss the most common types of liens and how long they remain in effect.
1. Construction Liens
Construction liens arise when a contractor, subcontractor, or supplier provides labor or materials for a construction project but is not paid. According to Ontario’s Construction Act, a lien can be placed on the property within 60 days of the last day of work or the last day materials were supplied.
However, this lien does not last indefinitely. The lienholder has 90 days from the date the lien is registered to start a lawsuit to enforce the lien. If no action is taken within this 90-day period, the lien expires and becomes invalid.
2. Tax Liens
A tax lien is placed on a property when the owner fails to pay property taxes. In Ontario, tax liens can last much longer than construction liens. Municipalities can enforce tax liens through a tax sale process after three years of unpaid taxes. Until the debt is cleared or the property is sold, the lien remains on the title indefinitely. The municipality holds the right to collect the debt from the proceeds of the sale, or in some cases, may foreclose on the property.
3. Judgment Liens
Judgment liens result from a court ruling where the homeowner is found liable for an unpaid debt, such as a lawsuit or other financial obligation. A judgment lien can stay on a property for up to 10 years in Ontario, but it can be renewed for an additional 10 years if the debt remains unpaid. This means that a judgment lien could potentially remain on the property for 20 years or longer if renewed.
Removing a Lien from Your House
To remove a lien from your house, the debt that caused the lien must be paid in full or settled through negotiation. Once the debt is satisfied, the lienholder is responsible for discharging the lien from the property title. In some cases, legal action may be required if the lienholder refuses to discharge the lien after the debt is paid.
If you find yourself in a situation where a lien has been wrongfully placed on your property or the amount claimed is disputed, it is crucial to seek professional legal advice. Hiring a Real Estate Lawyer in Burlington, Real Estate Lawyer in Oakville, Real Estate Lawyer in Milton, Real Estate Lawyer in Hamilton, or Real Estate Lawyer in Toronto can help you navigate the complex legal landscape of real estate law in Ontario.
The Role of a Real Estate Lawyer in Managing Liens
Real estate lawyers play a vital role in handling liens during property transactions. They ensure that the property’s title is clear before a sale can proceed. If there is a lien on the title, the lawyer will work with the seller and the lienholder to either remove the lien or factor the lien amount into the sale transaction.
For instance, if you’re purchasing a home with an outstanding lien, the seller may use the proceeds from the sale to clear the debt. The real estate lawyer ensures that the lien is discharged from the title before the ownership transfer.
In cases where disputes arise regarding liens, real estate lawyers can help negotiate settlements or represent homeowners in court. This is especially important in cases where a lien is wrongly placed or if the lienholder makes an inflated claim.
Impact of Liens on Property Sales
A lien on your house can complicate or delay the sale process. Buyers are often wary of purchasing properties with outstanding liens because they could become responsible for the debt. Most mortgage lenders will not approve financing for properties with liens, further complicating the transaction.
If you’re selling a property with a lien, it’s essential to address the issue upfront. Speak with a real estate lawyer to understand your options and to develop a strategy for resolving the lien before listing the property. Failure to do so could result in potential buyers walking away from the deal.
Liens and Immigration Law
Interestingly, liens can sometimes intersect with Immigration Law, especially in cases where foreign nationals or immigrants are involved in real estate transactions. For example, newcomers to Canada who invest in property may face legal challenges if a lien is placed on their home due to unpaid debts or contractor disputes.
Hiring an Immigration Lawyer in Burlington, Immigration Lawyer in Oakville, Immigration Lawyer in Milton, Immigration Lawyer in Hamilton, or Immigration Lawyer in Toronto can help you understand the legal implications of liens, particularly if your immigration status complicates the situation. Immigration lawyers can also work with real estate lawyers to ensure that your property investment is protected and that any lien-related issues are promptly resolved.
Conclusion
A lien on your property in Ontario can last anywhere from a few months to several years, depending on the type of lien and the actions taken by the lienholder. Construction liens typically last for a few months, while judgment liens can remain on your property for up to 20 years. Tax liens can last indefinitely until the debt is paid or the property is sold.
If you’re dealing with a lien on your home, it’s crucial to seek professional legal advice. A Real Estate Lawyer in Burlington, Real Estate Lawyer in Oakville, Real Estate Lawyer in Milton, Real Estate Lawyer in Hamilton, or Real Estate Lawyer in Toronto can help you navigate the complexities of real estate law and ensure that your property rights are protected.
Additionally, if you’re a newcomer or an immigrant involved in real estate transactions, consulting with an Immigration Lawyer in Burlington, Immigration Lawyer in Oakville, Immigration Lawyer in Milton, Immigration Lawyer in Hamilton, or Immigration Lawyer in Toronto can provide you with the guidance you need to resolve lien issues while safeguarding your immigration status.
Understanding how liens work and the duration they stay on your property is essential for homeowners and buyers alike. Whether you’re facing a construction lien, a tax lien, or a judgment lien, being proactive and working with a knowledgeable legal professional is the best way to resolve the issue and protect your real estate investment.