You may have heard of the term ‘to put a lien’ on something, but you may be unsure as to what this actually means. What is a lien? And who can put one on your home, and why? What are the terms and conditions around putting a lien on your home? While it is certainly possible to have a lien placed on your home, there are certain circumstances and requirements around doing so. Whoever is placing a lien on your home will first need to prove that you owe them money before they can take any action. In this article, we answer ‘who can put a lien on your house in Canada?’, and discuss the impact and actions you can take if you find yourself with a lien on your home.
What does it mean to put a lien on your house in Canada?
Put simply, if you owe a debt in Canada, anyone can put a lien on your house. This is even simpler to do if the debt you owe is associated with your house. An example of this is a home equity line of credit or a mortgage – until it is paid off in full, your mortgage lender or financial institution may seize your house as collateral if you are not able to make your mortgage payments and default. In this sense, it is like a secured debt – the same can happen with a car loan debt, for instance. A lien can be placed on any property you have.
Who can put a lien on a property in Ontario?
As well as lenders and financial institutions, in Ontario specifically, there is a law known as the Construction Act. It permits any professional who may be supplying a service or materials – including contractors or subcontractors – to place a lien on the property. The only exception to this circumstance is when the owner is the provincial or federal crown. Your role will determine how long you have to place a lien on a property. A contractor, for instance, has 45 days following the Certificate of Substantial Performance or the abandonment of the contract to place a lien, whichever comes first. A subcontractor or a supplier has 45 days following the publication of the Certificate of Substantial Performance, or the date it finishes, whichever comes first.
Who can put a lien on a property in British Columbia?
In BC, it really depends what the money is owed for. Unless it is the Canada Revenue Agency (CRA), this will usually be a supplier or contractor, like a builder, an architect, or a supplier, that places a lien on a property. This is then typically a builder’s lien, or a construction lien. Builders have 45 days to place a lien once the project is either finished or abandoned according to the BC assessment. Another situation in which a lien may be placed is when an individual defaults on their property taxes.
Who can put a lien on a property in Alberta?
Alberta operates in a very similar way to BC when it comes to placing liens. In most scenarios, it is by construction companies or builders in line with the Builders’ Lien Act. Contrary to BC, contractors, suppliers, or builders have 90 days to place a lien on a property, which gives sufficient time for the owner to settle with any contractors or suppliers. Technically, the owner should pay the supplier within four weeks of receiving an invoice in order to avoid having a lien placed on their property, or any other type of collection. In some scenarios, the CRA will place a lien on a property also.
Can credit card companies put a lien on a property?
Simply, yes. If you do not pay your credit card debt and cannot afford it, your lender or financial institution may place a lien on your house. In order to do so, they need to be granted a legal judgment from the court. Once approved, the creditor can legally reclaim their money. You do not want to default, so if you owe credit card debt, you may wish to explore your debt relief options before it gets to this point. Licensed Insolvency Trustees are the only professionals in Canada legally able to file all forms of debt relief, so they are the best point of contact to help with this scenario. Typically, the sooner you reach out, the more options you will have.
Can a family member put a lien on a property?
Although less common, it is indeed possible for a family member to place a lien on your home. Beforehand, they would need to be granted a judgement from the courts and sue you. This means you would be given a warning of what is to come, which gives you an opportunity to handle the situation and hopefully get it resolved before a lien is placed on your home.
More than any other creditor, the Canada Revenue is extremely powerful when it comes to debt collection. They are able to place a tax lien on your property for either personal or corporate tax that is owed. What is even more worrying is that they can do so quickly, and often without notice. In fact, many Canadians do not even realize that there is a lien on their property until they go to sell it. Thankfully, you can check via registries to see if there is a lien on your property. There are also title searches you can run to show whether or not there are any claims under your title. If you are behind in your tax returns or tax debt payments, the CRA will exercise its powers to collect, and will place a lien on your property among other activities like freezing your bank account or pursuing a wage garnishment. Once a lien on your property is registered by the CRA, it effectively becomes a mortgage. If you want to sell your property, you will need to pay the CRA first. If you discover there is a lien on your property, you may wish to speak to a Licensed Insolvency Trustee for professional support.
Will I be notified if a lien is placed on my property?
This is very dependent on whoever places the lien on your property. If it is a judgment lien that is placed due to a court case, you would likely be notified about it. If it is the CRA or a builder who has chosen not to go through the courts, you will probably not be made aware of it. You can search through registers like the Personal Property Security Register (British Columbia) or Land Titles to see if the CRA has placed a lien on your property. Many Canadians do not, however, know that these registers exist and may not think to check. You are more likely to consider doing so if you are selling your home. No matter which province in Canada you live in, you do not need to be notified if a lien is placed on your property.
Can you sell a property with a lien on it in Canada?
You cannot sell your property until the lien has been handled accordingly. If you did not realize you had a lien on your property until you tried to sell it, you will need to settle the debt with your creditors before the sale can be completed. This is a vicious cycle for many Canadians, as often the reason they are selling their property is to gain money to give to their creditors as debt repayment. In some scenarios, homeowners may not even have a clue about the lien that has been placed on their property. As most creditors will simply want to reclaim the money they are owed, many will be open to negotiations and will want to work with you to create a payment plan for your debt.
What should I do if a lien is placed on my property?
Many Canadians do not realize that filing a form of debt relief can stop creditors taking action against you, including placing a lien on your property. Filing either a consumer proposal or a bankruptcy triggers a stay of proceedings, which offers protection from creditors and stops any legal action from taking place. This means the end to any bank account freezes, collection calls, and wage garnishments. As well as offering respite from your creditors, filing a consumer proposal will reduce your unsecured debt by up to 80% while enabling you to keep your assets. This includes the debts that have likely led to the lien being placed on your property in the first place. Filing bankruptcy, on the other hand, will completely eliminate your debts. It is the quickest pathway to a fresh financial future, and you can be discharged from bankruptcy in as little as nine months. If you owe debts or have been delaying filing your tax return because of what you think you will owe, it is best to be proactive. Facing your debts head on and speaking to a Licensed Insolvency Trustee to review your financial circumstances and recommend a debt relief pathway for you is a positive first step. Licensed Insolvency Trustees are the only professionals in Canada legally able to file all forms of debt relief in Canada, and they can help you to get back on track. At Spergel, our Licensed Insolvency Trustees have been helping Canadians become debt free for over thirty years, and we are here to help you too.
More questions about ‘who can put a lien on your house in Canada?’ At Spergel, we can help you to tackle a lien on your property, and get you on the pathway to gaining debt relief. Our experienced Licensed Insolvency Trustees treat every scenario with compassion and understanding – we are here to help. Book a free consultation with Spergel today. You owe it to yourself.