In order to secure payment for services or materials supplied, claimants must first “preserve” their construction lien by way of a Form 12 – Claim for Lien Under Section 34 of the Act.[1] In addition to the other content requirements listed in Section 34(5) of the Construction Act (the “Act”), a party claiming a construction lien must sign, or verify, the lien through Form 12. But who can sign this document?
Executing a Claim for Lien
In certain circumstances, especially where the lien claimant is a corporation, the answer is simple – anyone having signing authority of and binding authority over a corporation may execute the Form 12 on behalf of the claimant. Needless to say, an individual lien claimant operating under a business name may also sign on his/her own behalf.
However, suppose you hire an agent who either performs or monitors the majority of the work on your behalf. That person is neither an employee nor officer of your corporation, and is clearly a different entity than yourself as an individual. Is it still possible for that person to sign the Claim for Lien? Yes. In fact, Form 12 expressly indicates that a Claim for Lien may be verified by the claimant or an agent.[2] The better question is, just because an agent can sign on behalf a claimant, should they?
The Importance of Verifying a Lien
Once a Claim for Lien is preserved, it cannot be amended.[3] This means that the individual verifying the lien should be the one with the most amount of knowledge regarding the services or materials supplied by the claimant. A lien with incorrect information could have severe consequences, namely the losing of security rights otherwise provided by liens.[4] It is not surprising that, in the case of large contractors, very few CEOs or other signing officers have actual knowledge of the daily occurrences on the project site. As such, in these circumstances, it may be prudent to have an agent with actual knowledge and daily interaction on site to verify the lien.
This verification becomes even more important when one considers the rights provided to parties against whom a lien is claimed by virtue of Section 40 of the Act. This section allows said parties to conduct a “cross-examination” of the individual verifying the lien in order to either reduce the value of the lien or outright discharge it.[5] As such, a claimant may be better off having an agent or other representative verifying this important document, even where such agent is not directly related.
The foregoing is for informational purposes only and should in no way be relied upon as legal advice. If you have any further questions, or would like to schedule an appointment for legal advice tailored to your circumstances and business, please contact me at dan@fridmar.com.
[1] Construction Act, R.S.O. 1990, c. C.30, s. 34(5); O. Reg. 303/18: Forms, s. 2(12) [Form 12].
[2] Form 12.
[3] Engineered Construction Ltd. v. Arena Entertainment Corp (2006), 2006 CarswellOnt 8685.
[4] Ibid.
[5] Act, ss. 40, 44(5), and 47.
