A lien is a security interest granted over property in order to secure payment of a debt. In plain English what that means to you is that someone—for example, your contractor--has placed a security on your property because you owe them money for services or materials. It’s a legal claim against the value of your home.

A contractor who has worked on your house can file a lien on your property in an attempt to force you to pay them what (they think) you owe. It’s their legal right to do so.

A lien is a way for them to ‘stake a claim’ on your house. And, if a contractor—or one of his subs—liens your property you won’t be able to sell it, refinance or mortgage it until the lien is settled. That means either until you’ve paid it off, or you’ve reached some kind of legal settlement and he’s withdrawn the lien. Or, it could actually go to court and eventually get settled by a judge.

The lien was designed originally as a way to protect contractors from homeowners who wouldn’t pay their bills. Believe me, it happens. I’ve spent a lot of time telling stories of homeowners who’ve been ripped off by contractors—but it goes the other way too. There are many stories of spiteful or unscrupulous homeowners who try and rip off their contractor.

Another very important reason the Lien Act was created was to protect sub-trades. Sometimes a contractor will satisfy the terms of the contract, and the homeowners are happy with the finished job. But he’ll ‘forget’ to pay his subs, and they are left holding the bag. Their only recourse is to lien the house, in an attempt to get paid by the homeowners what they are owed. No, it’s not fair to the homeowners, but it’s not fair to the subs either if they don’t get paid.

Don’t forget--liens aren’t designed to protect homeowners. They are designed to protect contractors and their subs, and suppliers of material as well.

Even if the reason you refused to pay is that the work was done badly, or that it wasn’t even finished, the contractor can still lien your property. It becomes up to you to prove your case—usually in court. This will take time, and money if you get a lawyer. Like I said, it’s not fair.

The contractor has a time limit in which to file a lien on your house—usually 45 days after the job has been completed or abandoned--but that time limit may vary depending on where you live.

So what happens if your contractor puts a lien on your house? Whatever you do, don’t panic. Don’t rush in and pay him off because you are afraid he can force you to sell your home.

Find out what the lien is for. Is it a subcontractor who hasn’t been paid? Ask why not. Get the details from your contractor.

Sometimes the lien is justifiable, and you will have to pay what you owe. But sometimes the contractor is being vengeful—maybe you made him angry and he’s trying to get even. Do your homework and consult a lawyer if you need to.

A claim of lien only lasts one year from the date of filing—within that year the contractor must commence a lawsuit, or the lien expires. If you don’t need to sell or refinance your house, you could just wait it out. But make sure you take the extra step to have the expired lien removed from the title of your house!