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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.
Disclaimer: This article on breaking your commercial lease is intended for the purpose of providing information only. It 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.
Perhaps you are a business owner who has outgrown your current space. Or you are a landlord who has reached your limit with a difficult tenant. Regardless, one thing is clear: you need to break that commercial lease.
This article will explore the process and what you should consider before breaking your lease. We will discuss this question from the perspective of both tenants and landlords.
(Negotiating your commercial lease? Feel free to read this article on what you need to know.)
The Significance of Commercial Leases
Commercial leases are legally binding agreements. They outline the terms and conditions governing the use of commercial properties. These leases play a crucial role, defining the rights and obligations of the tenant and the landlord.
Lease agreements can be complex and specific to each situation. As such, the process of breaking a commercial lease may vary. The terms of your lease will dictate what you can do next. Below, we’ll explore some common strategies for both tenants and landlords:
Breaking a Commercial Lease as a Tenant
Breaking a commercial lease in Ontario as a tenant requires careful thought. You must adhere to the terms of your lease and to legal procedures. Here are several strategies tenants can consider:
Give Your Landlord Notice
When ending a lease that has a specific term, you can give your landlord notice. For monthly leases, one month’s written notice is typically required.
Landlord Breach of Lease
If your landlord does not follow the terms of the lease, you may have grounds for ending it. This can occur if the landlord impacts your business by altering access to the property. In such cases, you can consider the lease terminated and sue the landlord for damages.
Under certain situations and with landlord consent, you can sublease all or part of the rented property. This allows you to pass on the use of the property to another subtenant. Keep in mind that you remain financially responsible for the original lease.
Similar to subleasing, you can assign your lease to a new tenant. This means the new tenant takes over your tenancy and the terms of the lease. The landlord must agree to this arrangement.
Breaking a Commercial Lease as a Landlord
Landlords can also face situations where they may think they need to break a commercial lease. However, they do have other options.
Distraint is seizing someone’s assets to be paid for money owed. Landlords may be able to use this remedy to deal with outstanding rent. In that instance, they would enter the premises and seize goods with a value up to the amount of outstanding rent.
Landlords can sue tenants for monetary damages resulting from breaches of the lease terms. For example, if a tenant causes significant damage to the property beyond normal wear and tear, the landlord can seek compensation for repair costs
Seeking an injunction can stop a tenant from engaging in activities prohibited by the lease. For example, if a lease explicitly forbids using the rented space for specific activities, such as operating a noisy nightclub in a residential area, and the tenant violates these terms, the landlord can seek an injunction.
Landlords can seek an order of specific performance to force a tenant to fulfill lease obligations.
However, sometimes a landlord’s only option is to terminate the lease. Here are some common remedies that are available.
Landlords can terminate the lease by providing written notice to the tenant and preventing them from entering the premises.
Writ of Possession:
In some cases, physically excluding the tenant is impractical. In those cases, landlords can obtain a writ of possession to take possession of the property on their behalf.
Seek Professional Assistance to Break Your Commercial Lease
Whether you’re a tenant or a landlord, breaking a commercial lease in Ontario is no simple matter. It’s essential to consult an experienced business lawyer to ensure as smooth a process as possible.
If you find yourself in such a situation, don’t hesitate to reach out to legal experts like Beeksma Law. Our team of experienced lawyers has the expertise to guide you through the process and protect your interests. Book your complimentary consultation today!
Disclaimer: This article on dissolving a corporation in Ontario is intended for the purpose of providing information only. It 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.
Whether you’re in the process of closing your business, embarking on retirement, or facing any other situation that leads to the conclusion of your corporation, ensuring a smooth and effective closure is essential.
If you’re seeking guidance on the best approach to dissolving your corporation, you’ve come to the right place. In this article, we’ll provide you with valuable insights to ensure that the process of ending your corporation is executed correctly.
Reasons for Dissolving a Corporation
There are various reasons why a corporation may need to be dissolved in Ontario. While corporations may be involuntarily dissolved under the Ontario Business Corporation Act, this article will only consider voluntary dissolutions. It could be due to the company no longer being profitable, a change in business direction, the owner retiring, or the decision to pursue other opportunities.
Corporations may choose to dissolve if they want to consolidate or restructure their business. This could involve merging with another company or spinning off certain divisions. Dissolution provides a legal framework for these changes.
Whatever the reason, it’s important to understand the implications and legal requirements that come with dissolving a corporation.
What happens when you dissolve your corporation?
When a corporation is dissolved, it means that the legal existence of the corporation comes to an end. The company is officially closed, and its operations cease. The process involves settling all debts, distributing assets to shareholders, and fulfilling legal obligations.
It is worth noting that you can only dissolve your corporation if there are no lawsuits against it and you will need to make a statement to this effect. Therefore, if there are any lawsuits against you and you do dissolve the corporation, the other party will file a motion with the court to have you revive the corporation, and the lawsuit will continue.
Once a corporation is dissolved, it cannot continue to conduct business under its previous legal structure. The business activities associated with the dissolved corporation must stop. This includes sales, transactions, and any other operational functions.
Legal Requirements for Dissolving a Corporation in Ontario
There are differences between dissolving an Ontario corporation and a Federal corporation. Here’s a broad breakdown of what is involved.
Step 1: Make sure your corporate minute books are up to date.
First, make sure your minute book is up to date. You can learn more about what should be in your minute book here.
Step 2: Drafting Resolutions
Next, your corporation’s lawyer will craft resolutions that authorize the dissolution of your corporation. This includes a special resolution that needs approval from the corporation’s shareholders.
Step 3: Fulfilling Debts and Obligations
Before proceeding, it’s vital to settle all outstanding debts and obligations. Speak to your accountant, as the corporation must clear any unpaid taxes, file its final tax returns, and obtain essential tax clearances.
But what if there are remaining assets after settling debts and obligations? These should be distributed among shareholders according to their rightful entitlements, such as the Articles of Dissolution in Ontario.
Step 5: Government Filing
If the corporation is devoid of assets and debts, the next phase involves filing the appropriate forms and supporting documents. To dissolve an Ontario corporation, you must file Articles of Dissolution. Once confirmation of the dissolution is received—typically in the form of a “Certificate of Dissolution”—it’s important to update the corporation’s minute book to reflect this change.
Step 6: Retaining Records
Once your corporation has been dissolved, retain your records, such as your corporate minute book, proof of dissolution, and other pertinent corporate records. This ensures that your documentation remains intact and accessible for any future requirements.
By following these steps, you can successfully dissolve your corporation and move on to your next venture.
Tax Considerations When Dissolving a Corporation
Dissolving a corporation involves significant tax considerations. You must think about your final tax returns and seek professional tax advice to identify potential benefits like capital losses and deductions. Shareholders should also account for personal tax liabilities, particularly if assets are distributed as dividends, in order to effectively plan and minimize tax burdens.
Seeking Professional Assistance for a Smooth Dissolution
If you want to move on to the next chapter, you want to ensure you are doing so correctly. You need support from knowledgeable professionals, such as your accountant and an experienced business lawyer.
So, if you’re considering dissolving a corporation in Ontario, don’t hesitate to reach out to Beeksma Law. Our team of business lawyers has the expertise and knowledge to provide you with the necessary support and guidance to dissolve any worries you may have.
Disclaimer: This article on small business contracts is intended for the purpose of providing information only. It 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.
Starting a new business can be incredibly rewarding and incredibly overwhelming. Not only are you trying to make your vision a reality, but you are suddenly thrust into entrepreneurship and everything that goes with it. From keeping your finances in order to figuring out how to best market your business, there is a lot to do.
So, amongst all those things on your to-do list, why should you prioritize having proper contracts? While there are many benefits, this article will focus on four:
- Contracts ensure all the parties know what to expect.
- They impact how your client views you and your level of professionalism.
- Contracts prevent scope creep.
- Finally, they affect your cash flow and make it easier to get paid.
Benefit #1: They get everyone on the same page
One main advantage of proper contracts is that they get rid of ambiguity. When you have every detail clearly defined and agreed upon, contracts get everyone on the same page, knowing what to expect and how your working relationship will move forward.
It can also save you time – instead of answering questions or clarifying terms, you can focus on doing what you love!
Benefit #2: It solidifies your image as a trustworthy professional.
Your contract is part of how you show up and represent your brand. Crafting a top-notch contract showcases your business as professional and dependable, showing your willingness to stand by the agreed terms.
A contract signifies your dedication to your business relationships and demonstrates that you’re placing your reputation on the line for the success of these relationships. Your contract sets the expectation that you will provide the same level of care throughout your working relationship, giving those who work with you confidence in the whole process.
Benefit #3: It prevents “scope creep.”
Service professionals are well-acquainted with the concept of scope creep. Scope creep happens when the original parameters of a project gradually expand beyond the initial agreement.
Without a well-defined contract, it’s easy for “one more thing” to multiply into a long to-do list, often leading to frustration, misunderstandings and more time on a project than you bargained for.
A comprehensive contract safeguards against scope creep by clearly outlining the scope of work, deliverables, timelines, and potential additional costs.
There’s less room for ambiguity when both parties clearly understand what’s included. You and your clients can be on the same page from the beginning, which reduces the likelihood of disputes arising from misunderstandings or misaligned expectations.
Benefit #4: It is better for your finances.
If your contract spells out what you will be paid and when it creates a more predictable cash flow for your business. This predictability allows you to plan your finances better, allocate resources, and manage your business operations more effectively.
In addition, having a solid contract means you are less likely to have situations where clients delay payments or try to renegotiate payment terms later. If there’s a disagreement about cost, you can refer to the contract terms and find a resolution based on the agreed-upon terms.
Protect Your Business With Beeksma Law
At Beeksma Law, we have the expertise to tailor custom contracts for your business. Rather than relying on generic templates from the internet, you can experience the assurance that a dedicated lawyer, well-acquainted with your business, is actively involved in crafting contracts that will bolster its foundations.
We are also closely connected to our small business community. Shayna Beeksma, the founder of Beeksma Law, is part of various groups for entrepreneurs and has mentored many small business owners.
We understand the challenges you face and the importance of solid contracts to protect the business you are so passionate about. Book a call with our team today to discuss your business needs!
Disclaimer: This article on Navigating Construction Liens in Ontario is intended for the purposes of providing information only. It 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.
Construction liens are on the rise in 2023. As we mentioned in an earlier article, this is to be expected as litigation will increase during economic uncertainty. This also extends to construction liens. The good news is that you can protect yourself and your business by understanding:
- what a lien is,
- how it works, and
- when to act before the situation gets out of control.
As with all business matters, protecting yourself comes down to two actions: understanding your rights and working with someone to help you both prevent and react to a lien.
What are construction liens?
A construction lien is a legal claim that one party registers against a property that is undergoing construction or renovation. It’s a form of security for payment that ensures that you pay the contractors and subcontractors for the work and the materials supplied. The lien gives the claimant the right to sell the property to recover the money owed to them.
The Ontario’s Construction Act governs construction liens. It sets out the rules and procedures for registering and enforcing liens in Ontario. The Act applies to all construction projects, whether they’re residential or commercial and whether they’re new builds or renovations.
How do construction liens work in Ontario
A construction lien is a powerful tool that can have serious consequences for both property owners and contractors. Here’s how it works:
- A contractor or subcontractor who has provided services or materials on a construction project and has not been paid can register a lien against the property.
- The claimant must give notice of the lien to the property owner and other interested parties, such as the mortgage lender.
The lien must be preserved (by registering it on title or providing a notice of lien) within a specific timeframe. That timeframe is now 60 days after the last day of work or supply of materials. It was previously 45 days, but this changed as of October 1, 2019. Once a party registers a lien, the property owner cannot sell or mortgage the property until the lien is resolved.
The claimant (the person who registered the lien) must “perfect” the lien within 150 days of the last day of work or supply of materials. Perfecting the lien means commencing legal action to enforce the lien.
Protecting yourself as a contractor
As a contractor or subcontractor, it’s important to protect yourself from non-payment.
One of the best ways to protect yourself is to make sure that all contracts are in place before starting any work. The contract should clearly define the scope of the project, payment terms, deadlines and other relevant details, such as who owns any materials provided by the contractor.
Having an enforceable contract in place will help avoid disputes down the line if there is ever an issue with payment. It’s also important that you make all payments on time according to the schedule in your contract to minimize any potential delays or issues further down the line.
It’s important that you keep careful records. If you find you’re having difficulty collecting payment from a client or are getting a run-around, you will be ready to register a lien against the property owner. You will also need to be organized when it comes to ensuring that you register within 60 days. The courts will hold to that deadline, so make sure you do everything necessary to ensure you register your lien in a timely manner.
Protecting yourself as a property owner
If someone registers a lien against your property, it is a serious issue and can have a major impact on your ability to sell or mortgage the property. Outstanding liens delay a project, or, even more seriously, financial institutions may even freeze loans or lines of credit.
The only remedy that you, as a homeowner, have against a construction lien relates to the work done. Did the contractor complete the requested work? If the contractor did not complete the work, then you may have grounds to dispute the lien.
It’s important to note that the standard is not whether or not the contractor completed the work to your standards. It is whether or not they did the work under the contract to the level of a “reasonable contractor”.
You can also include in your contract a “holdback”. This means that you can withhold a specified amount of funds from the contractor until the lien has expired or been released. It is important to consider this option as it may give you some protection against construction liens in the future. For example, if a subcontractor registers a lien for non-payment by the contractor, you can use the funds in your holdback to cover part or all of that subcontractor’s claim.
Of course, always make sure that you do your research and hire a reputable contractor before commencing any construction project.
Dealing with construction liens: Don’t wait!
As with most legal matters, the more proactive you are, the better. Whether you are disputing work done to your home or waiting for payment as a contractor, do not wait! Contact us right away to ensure we can resolve it in a timely and cost-effective manner.
Whether you are a contractor or property owner, understanding construction liens and how they work is important in order to protect yourself from potential financial losses. At Beeksma Law, we help our clients deal with construction lien matters and can provide you with the legal advice that you need. Contact us today for more information. ?