Understanding Liens in Canadian Real Estate: What Homeowners and Buyers Need to Know
Leila Khan
Wednesday, March 5, 2025
Common Types of Liens in Canada
Construction Liens – Filed by contractors or tradespeople when they have not been paid for work done on a property.
Tax Liens – Placed by the Canada Revenue Agency (CRA) or municipal government for unpaid property or income taxes.
Judgment Liens – Result from court rulings where a creditor is owed money due to a lawsuit.
Mortgage Liens – The most common type, allowing a lender to foreclose if mortgage payments are not made.
How a Lien Affects Property Transactions
A lien must be cleared before a property can be legally sold.
Buyers should always request a title search to check for liens before purchasing.
If a lien is discovered, the seller must resolve it, either by paying the debt or negotiating with the lienholder.
How to Remove a Lien
Pay the outstanding debt and obtain a lien release.
Negotiate a settlement with the creditor.
Dispute the lien in court if it was placed in error.
Protecting Yourself from Liens
For homeowners, staying current on debts and properly managing renovations can help prevent liens. For buyers, working with a real estate lawyer and conducting due diligence ensures a smooth purchase.
Liens are a critical part of real estate transactions in Canada. Understanding them can help buyers and sellers navigate the market confidently. If you’re buying or selling a home and need professional guidance, reach out for expert real estate advice! Call The Leila Khan Team today at 416-300-3453
Construction Liens – Filed by contractors or tradespeople when they have not been paid for work done on a property.
Tax Liens – Placed by the Canada Revenue Agency (CRA) or municipal government for unpaid property or income taxes.
Judgment Liens – Result from court rulings where a creditor is owed money due to a lawsuit.
Mortgage Liens – The most common type, allowing a lender to foreclose if mortgage payments are not made.
How a Lien Affects Property Transactions
A lien must be cleared before a property can be legally sold.
Buyers should always request a title search to check for liens before purchasing.
If a lien is discovered, the seller must resolve it, either by paying the debt or negotiating with the lienholder.
How to Remove a Lien
Pay the outstanding debt and obtain a lien release.
Negotiate a settlement with the creditor.
Dispute the lien in court if it was placed in error.
Protecting Yourself from Liens
For homeowners, staying current on debts and properly managing renovations can help prevent liens. For buyers, working with a real estate lawyer and conducting due diligence ensures a smooth purchase.
Liens are a critical part of real estate transactions in Canada. Understanding them can help buyers and sellers navigate the market confidently. If you’re buying or selling a home and need professional guidance, reach out for expert real estate advice! Call The Leila Khan Team today at 416-300-3453
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