When Construction Liens Go Too Far

Construction liens are a powerful legal tool. They can cloud title to a property and put enormous pressure on homeowners long before any evidence is tested at trial. But liens can also be misused — filed by parties with little genuine involvement in a project, or structured to shield the real claimant from financial risk.

At Ebady Law, we have extensive experience helping clients navigate construction disputes, challenge improper liens, and protect themselves against cost exposure. We have successfully brought motions to compel document production, obtained security for costs orders and ensured that the true nature of a claim is put before the court.

When a Lien Does Not Tell the Whole Story

Not every construction lien is what it appears to be. In some cases, the person who files the lien is not the person who actually did the work or entered into the contract. Courts have recognized this issue and have tools to address it, including ordering security for costs where a plaintiff appears to be a nominal stand-in for someone else.

Under Rule 56.01(1)(d) of the Rules of Civil Procedure, a court can require a plaintiff to post security for costs where it appears that the plaintiff is acting as a front for another party and lacks sufficient assets in Ontario to satisfy a costs award. This is an important protection for defendants who face the prospect of winning a case but being unable to recover what they are owed in costs.

Courts have also been clear that where a plaintiff refuses to produce relevant financial records, that failure can itself support an inference of insufficient assets.

A Recent Example

We recently acted for homeowners who had paid over $1.1 million to contractors for a major renovation project. Despite having made all agreed payments, a construction lien was filed against their property by a party who admitted under oath to having no direct involvement in the project: she never visited the site, had no dealings with our clients, and described her role as purely administrative. The lien appeared designed to insulate the true contractor from exposure to a costs order.

We brought a motion seeking compelled production of key financial and business records, as well as security for costs. The motion was granted in full. The court ordered $75,000 in security to be posted incrementally through the litigation, froze the plaintiff's ability to take further steps until payment was made and awarded our clients $5,000 in costs for the motion.

What This Means for You

If you are facing a construction lien that does not seem to reflect the true state of your dealings with a contractor, you may have options. Depending on the circumstances, it may be possible to challenge the validity or quantum of the lien, compel disclosure of records that the other side is withholding, and seek financial protection through a security for costs order.

Our team can assess your situation and advise on the best path forward.

This blog post is for general informational purposes only and does not constitute legal advice. Please consult a lawyer for advice specific to your situation.