New Decision on Liening Work Done for Tenants – Use the Form!
1276761 Ontario Ltd. v. 2748355 Canada Inc., 2005 CanLII 24749 (Ont. S.C.J.)

In Ontario, when work is done for tenants, there are two ways to lien the freehold. One is easy, one is exceedingly difficult. The easy way is for the contractor to notify the landlord according to s. 19 of the Construction Lien Act, in advance, that work is going to take place and that it is intended to look to lien rights against the freehold interest in the event of non-payment. If the landlord receives the notice and does not respond in writing by disclaiming liability within 15 days, the contractor can attach its liens to the underlying fee simple. The almost impossibly hard way is to plead the landlord into the lien action as an “owner”.

On July 7, 2005, the Ontario Superior Court of Justice released its decision in 1276761 Ontario Ltd. v. 2748355 Canada Inc., in which a lien claimant attempted to do the right thing by giving notice to the landlord, but failed to do so properly. There is a statutory form for the section 19 notice, but for some reason, lien claimants often ignore it and create their own notices, with often fatal results. Form 2 under the Construction Lien Act reads as follows:

In this case, the lien claimant gave notice which was not in Form 2. While it is not imperative that the notice be in Form 2, at the very least it has to contain the basic elements of that form, i.e. details of the contract between contractor and tenant; a warning about the liability of the landlord directing the landlord to s. 19(1) of the Act; a statement of the contractor’s intention to hold the landlord liable under the section; and specific mention of the landlord’s obligation to disclaim responsibility in writing if it chooses to do so. In this case, the notice was held not to be sufficient because it did not put the landlord on notice that its property might be subject to a lien claim and a copy of the contract was not provided to the landlord.

Not surprisingly, the lien claimant’s attempt to make the landlord an “owner” also failed because there was neither an implied nor express request by the landlord to do the work.