I Paid My Contractor in Full — So How Can There Be a Lien on My Home? An Ontario Construction Act Survival Guide for Homeowners

Step 1: Understand why a lien can attach to your title even when you've paid

The hardest sentence for a homeowner to accept in a renovation dispute is, “I paid everything I owed — how can I be on the hook?” The answer lives in the structure of the construction chain.

On a renovation or new build, money usually flows like this: you (the owner) pay the general contractor (GC); the GC pays the trades — electrical, plumbing, framing; those subcontractors pay their own workers and suppliers. Ontario’s Construction Act lets anyone on that chain who supplied labour or materials register their unpaid claim against your title.

In other words, a lien attaches to the property, not to your contract. The fact that you have no direct contract with a subcontractor does not stop that subcontractor from liening your home. So the real risk isn’t whether you paid your GC — it’s whether that money actually flowed all the way down the chain. If it stalls at any link, it’s your title that gets hit, regardless of how diligently you paid your own contractor.

• Who can register a lien: general contractors, subcontractors, sub-subcontractors, workers, and material suppliers who contributed to an “improvement” of your property
• Where it lands: on your home’s title, publicly searchable
• The consequence: with a lien on title, the home is effectively unsellable and hard to refinance until the lien is cleared

Step 2: Hold back the statutory holdback — your first legal safety cushion

The single most important self-protection built into the Construction Act is the holdback. Per Caravel Law’s explainer on the Act (2026), every payer must retain a holdback equal to “10 per cent of the price of the services or materials as they are actually supplied,” until all potential liens have expired or been satisfied.

What does that mean for you as a homeowner? Even if your contract is silent on it, the law expects you to hold back 10% rather than paying the full contract price to your GC up front. That 10% isn’t money you get to keep — it’s a statutory pool of funds that protects the people downstream if the GC disappears or a subcontractor goes unpaid, while capping your own exposure at roughly 10%.

The core logic: if you pay everything out without properly retaining the holdback, and someone downstream is left unpaid, you can end up paying twice for the same work — exactly what the holdback regime exists to prevent.

So my first hard rule for renovation clients is always the same: put the 10% holdback in writing, and actually enforce it. Don’t settle up in full early just because the contractor is pushing for payment.

One nuance worth flagging: the holdback is calculated on the value of work as it is actually supplied, not as a single deduction at the very end. In practice that means the 10% accrues alongside every progress draw, building up a fund that stays in your hands through the lien period. Treat it as the contractor’s money that you are temporarily holding in trust for the chain — because functionally, that’s what it is.

Step 3: Watch the timeline — a lien does not last forever

Homeowners panic at the word “lien,” but the Construction Act puts strict time windows on it, and a lien expires if those windows are missed. Per Landy Marr Kats LLP (thetorontolawyers.ca, 2024), the key timeline works like this:

1. Preserve: the lien must be registered against title within 60 days of a triggering event, or the right is lost. The trigger is typically completion of the contract, publication of a certificate of substantial performance, or termination/abandonment of the contract.
2. Perfect: after registration, the lien must be “perfected” within 90 days of the last day on which it could have been preserved, by commencing a court action and registering a certificate of action.
3. Total window: combined, that’s roughly 150 days from the triggering event to walk the full legal process.

This timeline cuts both ways for you. On one hand, it means the holdback need not be retained forever — once the lien period closes and the risk window shuts, you can release funds. On the other, if someone does lien your title, the same clock dictates how fast you and your lawyer should respond. I’ve attributed these day-counts to the law firm sources above; for your specific project, rely on the text of the Construction Act and legal advice.

Step 4: When you can release the holdback — and the 2026 changes

The holdback isn’t held indefinitely. Per Caravel Law’s explainer on the Construction Act (2026), once the lien period expires — i.e., after completion or substantial performance, once the relevant lien risk window has closed — the holdback becomes due and payable. Put simply: the risk window shuts, then the money moves.

The important 2026 change (mandatory annual release): for longer projects that span more than a year, the new rules require owners to release accrued holdback annually, rather than locking it up until the entire project finishes. Per Caravel Law (2026), the process runs roughly as follows:

• The owner publishes a Notice of Annual Release (Form 6)
• The owner pays that holdback 60–74 days after publication
• The GC pays its subcontractors within 14 days of receiving the funds
• Subcontractors pay their downstream suppliers within 14 days of receiving the funds

For a typical household renovation that wraps up in a few months, the annual-release regime may never be triggered. But if you’re doing a large, multi-year rebuild or new build, these rules directly shape your cash-flow planning. Exception: if a lien already exists on the contract, this mandatory payment timeline does not apply.

Turning the four steps above into concrete actions, here’s the checklist I give renovation and self-build clients:

• Put the holdback in a written contract: spell out the 10% statutory holdback and pay in progress draws — don’t settle the full amount at once.
• Pay by stages, against milestones: set draw points for foundation, framing, and finishing, each tied to work you’ve actually inspected, so you never over-advance funds.
• Require a lien-free / statutory declaration: before each draw, have the GC sign a written declaration confirming that downstream subs and suppliers have been paid — this is the most direct proof you can get that the money flowed down.
• Keep every payment record and inspection note: if anyone asserts a lien, your payment history is your first line of defence.
• If a lien appears on title, call a lawyer immediately: with the 60/90-day clock running, speed keeps you in control.

This matters just as much for buyers and sellers: if you’re about to sell or refinance, a lien on title will stall the closing. Search the title before you list — if there’s a lien, either satisfy it or have it “vacated” through a legal process, rather than discovering it a week before closing.

A quick word on the modernized Construction Act itself. When the old Construction Lien Act was overhauled, Ontario layered in a “prompt payment” regime and a fast-track adjudication process designed to push money down the chain on fixed deadlines and resolve disputes without waiting years for a full lawsuit. For a homeowner, the practical takeaway is that the system is increasingly built around money moving on time — but none of that removes your responsibility to hold back correctly and to document payment. The reforms help the chain function; they don’t substitute for your own diligence on title.

The key to a low-stress renovation isn’t finding the cheapest contractor — it’s how you pay, the pace of payment, and your paper trail. Use the holdback and the timeline well, and your title stays protected.

I already paid my general contractor in full — can a subcontractor still lien my home?

Yes. Ontario's Construction Act lets anyone in the construction chain who supplied labour or materials register an unpaid claim against your title, even if you have no direct contract with them. That is exactly why the law requires owners to retain a 10% holdback — it caps your exposure and protects downstream parties. The risk isn't whether you paid your GC, but whether that money flowed all the way down the chain.

How long do I have to hold back the 10%?

Per Caravel Law's explainer on the Construction Act (2026), the holdback is retained until the relevant lien risk window closes — typically after completion or substantial performance, once the lien period has expired. For multi-year projects, the 2026 mandatory annual-release rules also apply. Rely on the statute and legal advice for the exact release timing on your project.

If there's a lien on my title, can I still sell the home?

An unsatisfied lien on title generally stalls a closing: the buyer's lawyer will require it cleared before closing, and refinancing is similarly blocked. It's usually resolved by satisfying the amount owed or by having the lien 'vacated' through a legal process. Search your title before listing or refinancing so you can deal with any lien early.

Does a lien expire automatically if the deadline passes?

Yes, liens are time-limited. Per Landy Marr Kats LLP (2024), a lien must be 'preserved' (registered on title) within 60 days of a triggering event, then 'perfected' by court action within 90 days of the last day it could have been preserved, or the right is lost. But don't gamble on the other side missing the deadline — if you see a lien, get a lawyer promptly, because the clock runs for everyone.

As a renovation homeowner, what's the single most effective protection?

Pay in stages and, before each draw, require the GC to provide a lien-free statutory declaration confirming that downstream subcontractors and suppliers have been paid. Combined with a 10% holdback written into the contract, you achieve both 'don't pay it all at once' and 'documented proof the money flowed down' — the most practical pairing to keep lien risk off your title.