What are liens and how can they stop you from selling your property?

The TTC has promised a speedy removal of the liens but that raises the question of how such liens even get on someone’s property?
The TTC has promised a speedy removal of the liens but that raises the question of how such liens even get on someone’s property? (Photo: iStock)

When Toronto, Ont. homeowner Sandra Sutton wanted to sell her home in the Leslieville neighbourhood, her lawyer gave her the unfortunate news that she couldn’t do so because there was a construction lien on the title of her home.

It turns out that the same lien also affected more than 100 other nearby homeowners. They were all hit with a $1.4 million lien due to a dispute between a contractor and subcontractor doing work on streetcar tracks.

The Toronto Transit Commission, who hired the contractor, told the Toronto Sun that the lien issue arose due to the TTC having entered into “permissions with property owners that would ... allow contractors to go onto their properties to do things like erect fences or move fences.”

However, as the property owners are faultless in this matter, the TTC has promised a speedy removal of the liens but that raises the greater question of how such liens even get on someone’s property?

Some of the most common reasons a lien is placed are:

  • A contractor/subcontractor issue;
  • A court judgement has been made against you that remains unpaid;
  • You haven’t paid child support and are in arrears;
  • You haven’t paid your taxes.

If you own a house or a condominium, it’s likely a lien for the amount you owe (plus accruing interest) will be placed on your property meaning you won't be able to sell or refinance your property.

However, a lien is not limited to just being placed on a home. Liens can also be placed on other personal property, such as cars, boats or even furniture. If the lien doesn’t involve interest in land then the land registry isn’t usually involved, rather it’s often filed in the personal property security registry of your province or territory, which is a public database to register liens or search for them.

If you are buying a used car, it’s usually a good idea to do a search in the registry, as well as a searching the vehicle identification number to make sure there are no outstanding liens, because if you buy a used car with a lien, it becomes your problem.

So, if you have a court judgment you haven’t paid off or a car loan for which you are in arrears, you better pay it or you may face a lien – if it hasn’t already been registered against your home or other property.

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