Small Claims Court is undoubtedly a popular venue for disputes related to construction and renovation. But, unfortunately, non-payment for these types of work and dissatisfaction with the job is all too common.
Construction Lien
- Outside of the Small Claims Court procedure, unpaid contractors often seek a construction lien to encourage payment from the customer.
- As a result, customers frequently have to deal with a lien on their property. It happens even if they believe that no payment is due under the circumstances because the work was shoddy.
For a contractor, is a construction lien always the best way to settle the account? On the flip side, is immediate payment the only option for a dissatisfied customer? In most cases, the parties involved say “yes” to both questions. Well, that’s not always right.
Advantages of the construction lien.
- Let us first briefly consider the nature of a construction lien. First, of course, a contractor may fairly easily register it against the customer’s house. To this end, all he needs to do is complete and file the necessary paperwork. He needs no preliminary court order.
- Of course, that makes the construction lien a more attractive option. It does not require going through small claims or other court procedures to obtain it.
- However, this may be the only advantage of this legal instrument for small contractors. We refer to money claims that do not exceed the monetary jurisdiction of the Small Claims Court ($50,000).
Disadvantages of the Construction Lien for Smaller Amounts.
Lien Preservation
- As mentioned, registering a construction lien is not very complicated. A contractor must file it with the land registry office or “preserve” the lien within 60 days after completing the work.
- If he does not do that, the lien “expires.”
Perfection of the lien
- However, that’s not all that needs to be done to make a construction lien work. Accordingly, to maintain the lien, the lien claimant must then “perfect” the construction lien within the next 90 days.
- To perfect the lien, the contractor must commence a court action against the owner of the house. In practical terms, this means that the contractor should prepare and file a plaintiff’s claim. Additionally, the contractor must undergo the entire legal process, just as they would in any other court case.
- The right to seize and sell the property under the lien arises only after the court decides the case in the contractor’s favour.
- If a contractor does not perfect the lien through a court procedure, the homeowner can easily remove it.
Cost of perfecting the lien
- Unfortunately, it is not commonly known among small contractors that a lawsuit to perfect a construction contract must be filed in the Superior Court of Justice.
- In practice, this means that even a claim for $10,000.00 must go to a higher court. For this reason, it does not matter if it is within the jurisdiction of the Small Claims Court. However, does it make practical sense to undertake all the legal expenses and complex procedures of the higher court when the claim can be efficiently made and considered in the Small Claims Court? Unfortunately, this is not usually the case.
If you need help with your claim or defence in the Small Claims Court, please contact Spectrum Paralegal.
