Ontario Contractor Disputes: Liens, Unpaid Invoices and Limitation Periods
Construction disputes in Ontario sit at the intersection of two statutes — the Construction Act and the Limitations Act, 2002 — and a short list of deadlines that, once missed, eliminate the contractor's remedies. This guide walks through the lien process, options for collecting on unpaid invoices, and the limitation periods every contractor must know.
What a construction lien actually is
A construction lien is a statutory charge on the land where the work was performed. It is created under Ontario's Construction Act and gives unpaid contractors, subcontractors and suppliers a security interest that can be enforced through court-ordered sale of the property. It is the most powerful collection tool in the industry.
A lien is preserved by registering a Claim for Lien against title to the property and perfected by issuing a statement of claim and registering a Certificate of Action. The preservation and perfection steps both have strict deadlines tied to last day of work or supply of materials.
The 60–90 day timeline
Under the modernised Construction Act, the contractor has 60 days after the last supply of services or materials to preserve a lien, and an additional 90 days after preservation to perfect it (i.e. issue and register the action). Miss either deadline and the lien is gone — even if the debt is real and undisputed.
The 60-day clock is not reset by minor warranty work or callbacks. Identify the true date of substantial performance carefully. A wrong date is one of the most common defects raised by owners to vacate a lien.
Prompt payment and adjudication
Since October 2019, the Construction Act has required prompt payment. Owners must pay contractors within 28 days of a proper invoice, and contractors must pay subcontractors within 7 days of receiving the owner's payment. Disputes can be resolved through statutory adjudication — a 46-day interim binding decision by a licensed adjudicator.
Adjudication has become a primary tool for cash flow disputes. The decision is enforceable as a court order and stands unless overturned in subsequent litigation. Contractors should treat adjudication as a first-line remedy rather than a fallback.
If lien rights are gone
Missing the lien deadline does not extinguish the debt. The contractor still has a contract claim and a breach of trust claim under section 8 of the Construction Act if the owner or contractor diverted funds. Trust claims survive bankruptcy of the corporate debtor and can attach to directors personally where they consented to the diversion.
Small Claims Court hears unpaid contractor claims up to $50,000. Above that, the action proceeds in Superior Court with broader procedural costs.
Documentation that wins cases
Three documents make construction collection cases winnable: a signed written contract or change-order trail, dated job-site photographs, and a detailed time-and-materials ledger. Verbal change orders are routinely disputed and rarely paid in full.
Issue invoices promptly, follow a written collection policy and preserve liens at the first signal of payment difficulty. The contractor who files a lien on day 45 always recovers more than the one who waits until day 65.