Title was clear on the closing date. The lien clock had been started weeks earlier by a publication the buyer was never party to, and it had another three weeks to run.
At a glance
A property investor bought the shares of a company holding three small industrial buildings in southern Ontario for $18.4 million. Two were stabilised and tenanted. The third, in Ajax, had just come out of a $2,140,000 fit-out for an incoming tenant, and a fourth project at a Cambridge building the company also owned had been abandoned mid-contract in February after a dispute with the general contractor.
Diligence included a parcel-register search on all three properties, dated four days before closing on 22 April. It came back clean: no claims for lien registered against any of them.
A parcel-register search is a photograph of what has already been registered. A lien exists before registration, and the statute gives its holder a window in which to register. The right question is not “are there liens on title?” but “where does each project sit in its own lifecycle, and how many days of that window are left?”
On the Ajax project the certificate of substantial performance had been published on 14 March, so the window ran to 13 May. Closing on 22 April fell inside it with three weeks to spare, against $486,000 of disputed money across the two live projects. The Cambridge project had no certificate at all, because it had been abandoned; it ran on a different limb of the same section, and on a date the data room did not contain.
Ajax. Contract price $2,140,000; certificate published 14 March; expiry 13 May. Basic holdback $214,000 at 10 per cent, plus a separate finishing holdback on work still to be supplied. Disputed change orders of $272,000 sat outside the holdback entirely — the usual shape, because a holdback secures the price and a dispute is about whether the price is bigger than the payer says.
Cambridge. The termination letter in the data room was dated 3 February, which would put expiry at 4 April. But the notice of termination was published on 9 February, the sixth of the seven days the Act allows, and it is the publication date that counts: expiry moved to 10 April. Still before closing, but six days later than the file said — and on the seventh day rather than the sixth the buyer’s margin would have been a single day.
The escrow. Total exposure was quantified at $486,000 — $272,000 of Ajax change orders and $214,000 of holdback that could not be released until the liens expired. The escrow was sized at $486,000 and dated not to the expiry of the lien period but to 90 days beyond it, because a lien that is preserved inside the window then has a further period to be perfected. Release date: 11 August.
Construction Act s.31(1) sets the frame: “Unless preserved under section 34, the liens arising from the supply of services or materials to an improvement expire as provided in this section.”
Section 31(2)(a) governs a contractor’s lien for work up to substantial performance: it “expires at the conclusion of the 60-day period next following the occurrence of the earlier of,” (i) “the date on which a copy of the certificate or declaration of the substantial performance of the contract is published as provided in section 32”, and (ii) “the date the contract is completed, abandoned or terminated”. Section 31(2)(b) covers work “where there is no certification or declaration of the substantial performance of the contract”, running 60 days from the earlier of completion and abandonment or termination.
Neither limb refers to the sale of the premises, to a change of ownership, or to notice. That is the mechanic: the buyer’s exposure on the closing date is a function of where each project sits in a timetable the buyer did not set and cannot change. Section 31(4) then splits that exposure where a supplier worked on both sides of substantial performance — “the person’s lien in respect of the services or materials supplied on or before the date of substantial performance expires without affecting any lien that the person may have for the supply of services or materials after that date” — so one trade can hold an expired lien and a live one on the same project.
And since 1 January 2026, s.31(6) requires that “No later than seven days after a contract is terminated, either the owner or the contractor or other person whose lien is subject to expiry shall publish a notice of the termination in the prescribed form and manner”, with s.31(7) providing that where one is published, “the date on which the contract was terminated is, for the purposes of this section, the date on which the notice was published” — or the first, where more than one is. Section 31(8) preserves the right to contest the validity of the termination. That is why the termination letter in the data room was the wrong document: the letter is evidence of the event, and the publication fixes the date.
Publication itself runs on s.32’s seven-day rhythm: the payment certifier gives the signed certificate to the owner and contractor within seven days, the contractor publishes it, and “Where the contractor does not publish a copy of the certificate within seven days of receiving a copy of the certificate signed by the payment certifier” or by the owner, any person may publish it.
The escrow duration comes from what follows preservation. A lien is preserved, where it attaches to the premises, “by the registration in the proper land registry office of a claim for lien on the title of the premises in accordance with this Part” — and under s.36(2), “A lien that has been preserved expires unless it is perfected prior to the end of the 90-day period next following the last day, under section 31, on which the lien could have been preserved.” Sixty days to preserve, ninety more to perfect: that is the real length of a buyer’s exposure, and the reason a 60-day escrow is too short.
The deal closed on 22 April with a $486,000 escrow released on 11 August. One subtrade preserved a lien on the Ajax property on 6 May for $61,400; it was discharged out of the escrow and the balance released on schedule.
The agreement also picked up two mechanics that cost nothing to add. The vendor covenanted to deliver, before closing, a s.31(5) declaration of last supply from every trade on both projects — on which “the facts so stated shall be deemed to be true against the person making the declaration” — and a specific representation identifying, per project, the publication date of any certificate or notice of termination. That is the fact the register does not show.
For the money side of the same statute, see sale proceeds that became trust money on closing — that mechanic is about who owns the cash; this one is about a charge on the land with an externally set expiry. See also an undischarged lien from a repaid equipment loan for the registry-side version of a stale encumbrance.
Closing on the clean parcel register and releasing the full price would have left the buyer owning a building against which a $61,400 lien was registered two weeks later, the vendor paid in full and $272,000 of change orders unresolved. The loss is not $61,400; it is the ability to deal with the property while the lien stands. A registered claim for lien blocks a refinancing or a sale until it is vacated, discharged or otherwise provided for, and vacating it means paying the full claimed amount plus security for costs into court. On a building being refinanced into a five-year term that summer, a three-month delay cost considerably more than the lien.
The tell was the wording of the diligence request: “confirm no registered liens”. That can only be answered as at a moment, and the answer is worthless the next day. The useful request is: per project, the contract price, the certificate or declaration of substantial performance and its publication date, any notice of termination and its publication date, and the last date any trade supplied.
The second tell was a termination letter with no publication attached. Since 1 January 2026 that publication is a statutory step with its own deadline; its absence from a data room means either it has not happened or it has not been collected, and both are worth knowing before funds move.
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