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What is a lien on a home in Canada?
It’s actually a pretty simple concept. Anyone can put a lien on your house if you owe a debt, especially if it is attached to your home. This means that a mortgage is technically a lien on your house. Until your mortgage is completely paid off, the bank can seize your house as collateral if you default on your mortgage. Same with a home equity line of credit. A lien claim can be put on any real property you have as well as other assets. The most common people to put a lien on your home is someone who worked on your homes and claims to have not received payment, and the CRA (Canada Revenue Agency). There are other people who can put a lien on your home too though, usually businesses and creditors.
What exactly is a lien though? Well, by definition, a lien is a right to keep possession of property until the debt is paid. If the debt is not paid, then the item can be seized for repayment. A record is kept of all liens on property because they can’t be sold with a lien on them, and the lien won’t be removed until the debt is paid.
Who can file a lien on a property in BC?
Who can file a lien on a property in BC ultimately depends on what you owe money for but, unless it is the CRA, it would normally be a builder (architect, supplier, worker) who files the lien. In this case, this is referred to as a builders lien which is also known as a construction lien. In regards to a builders lien, the timeline to file is 45 days once the project is completed, abandoned or ended. This is according to the BC Assessment. The other most common type of lien would be for defaulting on your property taxes.
Who can file a lien on a property in Alberta?
The rules regarding property liens in Alberta are similar to those in BC. While the CRA can file a lien on your property, same with the municipal governments, it is more likely to be construction companies or a contractor, subcontractor, labourer or supplier who files a lien. The Builder’s line Act allows this. The contractor has 90 days to file a lien This gives time for the owner to pay the contractor and the contractor to pay the supplier. The owner is expected to pay the contractor within 28 days of receiving a suitable invoice to avoid a lien or any other form of collection.
Who can file a lien on a property in Ontario?
In Ontario, there is the Construction Act. This allows anyone supplying service or materials to put a lien on the property. This applies to anyone who provides services for either the owner, a contractor or even a subcontractor. The only exception to this is if the owner is the federal or provincial crown. Depending on who you are will decide how long you have to apply the lien.
A contractor has 45 days after the Certificate of Substantial Performance or the abandonment of the contract to file a lien. Go by whichever happens first. A sub-contractor or supplier can file a lien 45 days after the Certificate of Substantial Performance is published or the date the subcontract is finished. Whichever happens first.
Another type of lien that can occur in Ontario is a Notice of Security Interest. It’s essentially a lien on a piece of property inside of the home. Most commonly a furnace, water heater or something similar. Creditors put these types of liens on homes and they often don’t know it’s there until a title search is done or they go to sell the home. Keep in mind that this doesn’t only happen in Ontario, it can happen anywhere.
Are credit card companies able to file a lien?
In short, yes they can. If you owe money on your credit cards and can’t pay for it, they can put a lien on your home. However, they do have to make a legal claim and get a judgment from the court to do so. Technically they could take some of the money from the sale of your home in order to get their money back.
Once the court rules a judgment lien has been approved, the creditor has a legal right to their money. This is always a possibility when a borrower defaults so, before it gets to this point, it might be a good idea to consider a consolidation loan if you are able to. This will put all of your debts together in one low monthly payment making it much easier to pay. Online lenders, credit unions and banks can all help with this.
What about family members?
In order for a family member to put a lien on your home they would have to get a judgment from the courts. This means they would have to sue you first. This means that you cannot just be blindsided with a lien from them. You would be aware of the lien and may even be able to deal with the situation before it gets to that point.
Can the CRA put a lien on property?
Yes, they can. The Canada Revenue Agency actually has a lot of power. One of the collection actions they have the power to do is put a tax lien on your home, or another form of real property that you own. This can either be for personal or business taxes. Oftentimes, you aren’t even aware that there is a lien on your home until you go to sell it. There are registries where you are able to check and see if there is a lien. A title search through a title company would be able to show you this as well as any other claims under your title. If you are in a situation like this it is best to discuss it with professionals like licensed insolvency trustees.
The CRA and Selling Assets
While it isn’t common, if you don’t pay your debts to the CRA, they’re able to seize your home, car, boat, and even rental properties. What they seize though, and how much will depend on what you owe. They then sell the assets in order to pay off your debts. This is why it’s important to get ahead of the money you owe, before it gets to this point. You can make an arrangement or speak with a licensed insolvency lawyer to find out your options.
Can you sell a house with a lien on it in Canada?
Once a lien has been placed on a home, that house cannot be sold until the lien has been dealt with. If you are attempting to sell your house and then discover the lien, you will have to find a way to settle the debt with the creditor before the sale can be completed.
This can often be a difficult process for some people because the reason they are selling is to get the money for the creditors, or in some cases, they never knew about the lien. Most creditors will be open to negotiating with you and creating a payment plan because their main goal is to get their money back.
Will I be notified if a lien is put on my home?
Whether or not you will be notified ultimately depends on who puts the lien on the property. It is a judgment lien due to a court case, then you would know about it. If it is the CRA or a builder that has not gone through the courts, then you won’t likely be notified. While you are able to search through certain sites to see if you have a lien on your property, most people wouldn’t even think to check. It likely is only noticed if you are selling your home or are going through a situation where your house needs to be rebuilt, even if insurance is involved.
Is this the same in every province?
Yes, this process is the same, even in Ontario. Legally, you do not always have to be notified if a lien is put on your home.
What is the cost of putting a lien on a home?
Ultimately, that depends on the type of lien and where you are filing the lien. In British Columbia, the cost of a builders lien is $5.00 per title and in Ontario it is $8.00. It is similar in other provinces as well. Overall, it is relatively cheap to file a lien. You do have to prove that you have a reason to file a lien though. You can’t just randomly put a lien on someone else’s property. You also have to meet any regulatory requirements regarding the type of lien you are filing.
