October, 2023
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Navigating Construction Projects in Ontario: Bonds and Government Properties
Disclaimer: This article is intended for the purpose of providing information on performance bonds and construction liens in Ontario and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
If you are a contractor or subcontractor, you are probably all too familiar with the importance of construction liens. After all, construction liens play a crucial role in securing payment for your services and materials in the construction industry. These legal tools provide you with a way to protect your interests and ensure that you receive the compensation you are owed for your work.
However, do you always have that option? Can you lien government property? If not, what options are available to you?
In this article, we will provide the answers to those questions. We will also note how this will affect you if you are a sub-contractor on a government or public contract.
Construction Liens: The Usual Process
In Ontario, the process for construction liens is governed by the Construction Lien Act. A construction lien is a legal claim that attaches to the premises. The lien claimant, the person entitled to a lien (such as a contractor or subcontractor), must take specific actions to preserve and enforce the lien.
The process usually starts when someone has the right to put a lien on a construction project. This happens when they take legal action to make sure they get paid for their work. Often, they start this process by saying that they’ve done most of the work, which is called a “declaration of substantial performance.” This step is really important in making the lien stronger. After that, they need to register a certificate of action, which makes their claim official and keeps it valid throughout the whole construction project.
Can You Lien a Government Property?
Generally speaking, no. You cannot register a lien on title against a property owned by the Crown. The Crown, or government, typically has immunity from certain legal actions, including the ability to place a lien on their property.
Does that mean you have no legal options to ensure you are paid? Of course not. That is where bonds come into play.
Bonds Required under the Construction Act
Section 85.1 of the Construction Act and section 12 of the General Regulation state a contractor must provide both a performance bond and a labor and materials bond for any “public contracts” with a contract value equal to or exceeding $500,000. These bonds must be in the specified formats required under they Act. They must offer coverage that is at least 50% of the contract price.
The Act defines a “public contract” refers to an agreement where the contracting party is either:
- the Crown,
- a municipality,
- or a broader public sector organization.
It’s important to note that this provision does not apply to contracts involving architects or engineers as contractors. Consequently, this requirement is designed to encompass all government-awarded construction contracts with a contract value of $500,000 or more.
A Note for Ontario Subcontractors
As subcontractors and suppliers, it is crucial to understand the role of bonds, especially when dealing with government properties. While construction liens may not be available for government-owned properties, performance bonds step in to provide payment protection.
When working on a government contract, it is essential to ask the contractor for proof of a performance bond. This bond provides payment protection for subcontractors and suppliers in case they encounter issues with non-payment by the contractor. With a performance bond in place, subcontractors and suppliers have recourse to file a claim against the bond to recover payment if they are not paid by the contractor.
By requesting proof of a performance bond before starting work on a government contract, subcontractors and suppliers ensure that they have a safety net in case of non-payment. This bond serves as an additional layer of protection and offers peace of mind to those involved in construction projects on government properties.
The Importance of a Strong Contract
A strong contract not only clarifies project scope, schedules, and costs but also addresses crucial issues like liability, risk allocation, and dispute resolution mechanisms. Moreover, it provides a clear pathway for recourse if any party fails to fulfill their obligations. In essence, a well-crafted contract serves as a project’s guiding document, offering security and peace of mind to all parties involved.
Engaging a lawyer to review and, if necessary, revise contracts ensures the agreement is effectiven and fair. Legal professionals can make sure the contract complies with relevant laws and regulations. This is especially important in industries with complex regulatory environments.
Lawyers can help identify and mitigate risks, draft precise language to protect their client’s interests. We can also suggest dispute resolution mechanisms that are fair and efficient. In essence, legal review adds an extra layer of security, reducing the chances of costly disputes and legal entanglements while ensuring that the contract accurately reflects the intentions and expectations of all parties involved.
Building a stronger business with Beeksma Law
Looking for exceptional legal support for your business needs? Look no further than Beeksma Law. We specialize in both the transactional and litigation aspects of business law . As entrepreneurs ourselves, we truly comprehend the significance of your business operations. Whether you require us to review your contracts, assist with non-payment issues, or something else, we have the expertise and dedication to protect your business.
Contact Beeksma Law today to ensure your business’s legal needs are met with precision and care.
Considerations for Buying Rural Properties
Disclaimer: This article is intended for the purpose of providing information on rural property in Ontario and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive. Updated October 2023.
Driven by rising house prices and the COVID-19 pandemic, more than 64,000 people left Toronto between mid-2020 and mid-2021. Many families are reevaluating their situations and are seeking greener pastures, quite literally.
Rural properties are becoming more popular as people are looking for more space and a slower pace of life. If you’re considering making a move to the country, there are a few things you should keep in mind.
There are considerations that you will want to consider for your family. For example, if you work from home, consider the internet quality and reliability in the area. If you have children, consider the schools and extra-curricular activities that are available. Don’t forget to account for the extra-long commute when you do need to go to the office.
However, from a legal standpoint, there are also differences in purchasing a rural property compared to an urban or suburban one. In this article, we will outline those unique requirements.
That includes:
- Road and waterfront access
- Septic systems
- Water tests
- Shared wells
- Planning Act contraventions
- Surveys and boundary issues
Of course, we encourage you to book a call with our team as soon as you have made an offer on your next dream home. We’re here to help and would be more than happy to answer any questions you may have.
Accessing Your Dream Home
You may have found your dream home, but can you access it?
Road access can be a critical concern, especially for waterfront or vacation properties. Sometimes, the access road or driveway crosses private land, and there may be no guaranteed legal right of use. Responsibilities for road maintenance are often unclear, creating the risk of access restrictions or unexpected repair expenses.
Your lawyer’s title search may involve tracing legal access through private properties to connect to a municipal road. Title insurance can help resolve access problems, but it’s not always available.
In Ontario, many bodies of water are encircled by a shoreline road allowance owned by the Crown. Typically, municipalities sell this road allowance to property owners. If this applies to the property you’re buying, it might encompass multiple parcels and PINs (Property Identification Numbers).
When reviewing a legal description that references a past instrument number, your lawyer will have to verify that it covers all the land you expect to acquire.
For properties where the shoreline road allowance hasn’t been purchased and conveyed, inquire about the proximity of any improvements to the water’s edge. Suspicion of encroachments onto the shoreline road allowance should prompt consideration of obtaining a survey.
Septic Systems Inspection
When you are buying a rural home that has a septic system, you will want to do a septic system inspection. In fact, your lender will usually required that it be done before approving your mortgage.
Many homeowners that are selling will provide it automatically, but if not, you will need to get this done.
The septic systems inspection will check items such as the size of the septic tank, the location of the leach field, and the condition of both. The inspector will also look for any signs of damage or leaks. This is important because if there are any problems with the septic system, it can be very expensive to fix.
Water Test
Another inspection that you will need to have done is a water inspection. If your home has a well, then you want to make sure that the water that you are getting is safe. Poor water quality can cause health problems, taste unpleasant or be costly to treat.
Therefore, if the seller does not provide this information to you, you will need to have a water inspection conducted to ensure that your water is not contaminated. Your realtor or our team can direct you how to have those tests completed.
Shared Wells & Shared Well Agreements
Rural real estate transactions can present unique challenges, and one such complexity involves shared wells. In rural areas, properties might rely on wells, some of which are shared among neighbors.
If you’re considering purchasing a property with a shared well, there are several crucial considerations.
Shared Well Agreement: Verify if there is a shared well agreement in place. The absence of such an agreement can lead to disputes and confusion regarding maintenance, repairs, and water usage responsibilities. Ensure there’s an agreement before finalizing your purchase.
Existing Shared Well Agreement: If a shared well agreement exists, obtain a copy and review it with legal counsel to understand your rights and obligations. The agreement should outline maintenance, cost-sharing, and water usage limitations.
Well and Water Quality: Assess the condition of the shared well and the water quality. If issues arise, negotiate repairs or upgrades with other parties sharing the well.
Risks and Limitations: Understand the potential risks of shared wells, such as contamination or overuse. Shared well agreements can restrict property modifications, so consider how they impact your future plans, such as pool installation or well expansion.
Title Restrictions: Unlike shared driveways, shared well agreements are typically not registered on property titles. However, it’s advisable to have such agreements prepared and passed from owner to owner.
Learn more about shared wells here.
Planning Act Contraventions
Because rural properties are generally not part of a plan of subdivision, our team will check for any Planning Act contraventions as part of our title search process.
Surveys
If you are purchasing a property that is either zoned agricultural or mixed-use, you will likely need to have a survey done before purchasing the property.
Otherwise, you may opt to have a survey done to be sure of the property boundaries. This is especially true if your property is large and open, with no fencing to mark those boundary lines.
This is something that you can discuss with your realtor or our team. Surveys can take months to complete, so unless it is zoned, as noted above, you can have that completed following your closing date.
Make a Move: Buying a Rural Property in Ontario With Beeksma Law
As you move out to the country, be sure to take the proper legal steps in your move. With offices in Hamilton and Owen Sound, Beeskma Law is poised to be able to handle your transition from urban to rural living. Our team is experienced in rural property transactions and would be more than happy to help you with any questions that you may have. Contact us today!