Are you curious about how to stop a lien on your property in Canada? There are several different kinds of liens that can tie up your property and prevent you from selling, and they can range from a minor annoyance to a major headache depending on your specific set of circumstances.
Perhaps you hired a plumber or other tradesman who quoted you one price, then jacked it up when they sent the final bill. Perhaps you’ve just renovated your home before listing it for sale, but your financing hits a snag and you can’t pay your contractors promptly.
Building trades aren’t the only source of liens on properties though but having any type of charge or encumbrance registered against your property can be a source of stress and conflict, especially if you feel the lien has been filed improperly or even abusively.
Canada Guide: Stop a Lien from Affecting Your Property
There are several types of liens other than those filed by builders, including registered notices of security interest, which can tie up equipment that may be leased or rented and installed in your home. But those don’t necessarily affect your property’s title, unlike those filed by builders, governments, or lawyers.
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Squeeze unpaid tax amounts out of people
Construction liens aside, there are also tax liens, solicitor’s liens, repairer’s or mechanic’s liens, and condominium liens. Tax liens filed by governments are a means to squeeze unpaid tax amounts out of people, while condominium liens play a similar role when a strata corporation or condo board needs to collect outstanding maintenance fees, special levies, or strata fines for breaking condo rules.
For their part, courts can issue writs of execution or writs of seizure and sale if you owe money on a court judgment, allowing sheriffs to seize and force the sale of the property to make sure a losing party to a lawsuit pays up.
Preventing Liens: How to Safeguard Your Canadian Property
Parties affected by a lien claim can file a petition to discharge a lien by paying the amount owing, but sometimes courts will remove lien claims if they can be shown to have been registered improperly.
Most liens can be stopped or cancelled through party-to-party negotiations through legal representatives, but provincial Supreme and Superior Courts in Canada are often asked to step in, to both declare the claims validly and to discharge them upon payment into court.
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Liens registered against your property
But liens registered against your property, whether it’s a parcel of land, your car, or other registrable personal property, have to be filed according to a rigid set of rules. In many cases, homeowners aren’t aware of charges registered against their property because they never get properly served documents to notify them.
Courts can step in and find that a lien was registered improperly or in bad faith or deem that a lien claim has expired if it wasn’t registered according to legislated deadlines.
Construction liens, though, can be registered on a property’s title somewhat easily, but they can expire. To avoid allowing a lien to expire, contractors can go to court for declaratory relief entitling them to an amount to be charged against a property’s title for the value of their contribution to a property’s “improvement.”
Stopping or removing a claim by paying the disputed amount into court is a common remedy, but that doesn’t necessarily put an end to the conflict. The court would still have to weigh in and hold the money unless the parties decide to settle.
Liens are indeed not created equal and can be used as unfair “leverage” against homeowners in contractual disputes, according to Pro Bono Ontario, a free legal aid service in the province.
According to the organization’s website, vendors and suppliers are given an “unfair advantage” in disputes with homeowners because they can file security interest notices upon installation of leased or rented equipment, creating an “enormous burden on consumers.”
The burden, according to Pro Bono Ontario, stems from the fact that banks and other lenders require a clear title on a property before a sale or financing deal can go through.
Security interests from their property
The organization claims it often fields “frantic” phone calls from property owners who have to clear notices of security interests from their property for thousands of dollars in a short period of time. They never knew the charge was actually registered, and they could be facing denial of a mortgage or a “lawsuit stemming from an aborted closing.”
Their only option to fix the problem, meanwhile, could be going to court in order to remove the charge. It’s a lengthy and often costly process, and equipment suppliers and vendors can use delay tactics to prevent you from selling or refinancing your home.
With that in mind, the legal aid advocacy group thinks that homeowners and consumers should be afforded a less complicated “streamlined” process through small claims courts. They claim it would allow people to “bypass uncooperative vendors” and be put on “equal footing” with the party claiming the charge.
Tips to Halt Property Liens in Canada: A Comprehensive Guide
Such was the case for an Ontario woman named Laurie Stevenson, who found herself in court with a company called Utilebill Credit Corp., which had used a door-to-door salesman from a company called Apex Home Services Inc. to sell furnaces and air conditioners.
She was told the equipment would cost just more than $7,000 with zero percent financing. But the company duped her and roped her into a lengthy financing deal where the equipment would be rented and cost $20,000 over the course of the rental agreement.
Appealed the punitive damages award
But she took the company to court and later won on appeal after the company objected to the lower court’s finding that it had defrauded her. The trial judge found the contract had been “excessively and grossly one-sided” and awarded Stevenson $10,000 in punitive damages. Utilebill Credit appealed the punitive damages award, objecting to the findings of civil fraud.
Apex, the company’s agent, was insolvent by the time it made it to the appeals court, and that left Utilebill on the hook for the punitive damages. The company’s charge against Stevenson’s property based on the bogus contract, after all, is what hampered her ability to refinance her mortgage.
Canadian Real Estate: Avoiding Property Liens
Utilebill, the appellate court’s ruling states, could have acknowledged that Apex as its agent had lied to Stevenson, and honoured the original contract, but “instead, Utilebill attempted to take advantage of its dealer’s fraud.”
These deceptive equipment rental contracts, which allow companies to register notices of security interest liens on properties, have come under much legal scrutiny but are yet to be outlawed in Ontario and elsewhere.
Stop a lien on your property in Canada
Getting a lawyer to help you remove a lien claim may be your best option, even if it seems daunting or too expensive. Navigating the court system alone when your home and financial security are at stake is a risky prospect, and an experienced lawyer like those we work with at Clearway can likely put your mind at ease if you’re facing a charge against your property that’s putting a sale or refinancing deal at risk of collapse.
Construction liens and charges registered by equipment suppliers against your home can be annoying and distressing, but liens filed by the Canada Revenue Agency over unpaid income taxes, goods and services taxes, or business or payroll taxes are a different story altogether.
Essential Steps to Stop a Property Lien in Canada
Under Canada’s Income Tax Act, the Canada Revenue Agency is given broad powers to collect unpaid amounts from delinquent taxpayers, whether they’re individuals or corporations large and small.
According to the debt counselling and bankruptcy trustee firm Sands & Associates, the Canada Revenue Agency is a “very powerful creditor” with many tools at its disposal to collect unpaid tax debts.
As a government agency, it can “access avenues of debt collection much more quickly” than private firms and individuals, while it diligently pursues securing its debts from “seriously delinquent accounts.”
Lien on a property for unpaid tax debt
The CRA can pursue collection of unpaid taxes by registering a lien on your home or other property, and a charge from the CRA “effectively” becomes like a mortgage on your property’s title.
While it won’t be quick to foreclose on your home over unpaid tax debt, Sands & Associates says that the CRA has to “get paid first” out of all other creditors if you decide to sell your home or transfer its ownership.
The debt firm also says that you can find out if the CRA has registered a lien on your land by searching out your property’s title with the Land Title Office or searching provincial Personal Property Security Registries like the one in British Columbia.
A Step-by-Step Guide
Depending on how much you owe, options to stave off the taxman’s collection efforts include filing for bankruptcy or making a consumer proposal to manage your mounting debts.
Either of those steps can “halt escalating collection actions,” stop the CRA from putting a lien on your home and even allow people to write off debts owed to the government.
The bankruptcy trustee company advises people to take a “proactive approach” to tax debts because allowing the CRA to start collection efforts can be “incredibly stressful” and liens filed by the tax agency aren’t easily removed unless you can pay the amount owing “in full.”
Stop a lien on your property in Canada conclusion
Finding out that there’s a lien or other charge on your property’s title can come as a costly surprise. If you plan to renew or refinance a mortgage or sell the land, clearing the property’s title is essential to a smooth closing.
Having to go to court to remove an abusive or improperly filed lien can be a stressful and long process, but in the end, if justice prevails, the peace of mind of having your home free and clear of liens and charges is likely worth the cost of calling a lawyer and knowing your rights.
We hope you found this guide on how to stop a lien on your property in Canada useful.