A Canadian Lien Waiver and Release is a legal document used in the construction industry by which a contractor, subcontractor, material supplier, or other construction participant waives and releases their construction lien rights against a property in exchange for payment. Construction lien waivers are an essential part of the payment process in Canadian construction projects, providing property owners, general contractors, and lenders with assurance that lien rights have been released and the property title will not be encumbered by construction liens.

In Canada, construction lien rights are governed by provincial legislation that varies across the country. Ontario's Construction Act (R.S.O. 1990, c. C.30, as amended by Bill 142 in 2018) governs construction liens in Ontario. British Columbia uses the Builders Lien Act (S.B.C. 1997, c. 45), while Alberta has the Builders' Lien Act (R.S.A. 2000, c. B-7). Each province has its own terminology, deadlines, and procedural requirements. A lien waiver must be drafted with awareness of the applicable provincial legislation to ensure it is effective and enforceable.

The lien waiver can be either conditional or unconditional. A conditional lien waiver becomes effective only upon the actual receipt and clearance of the specified payment. If the cheque bounces or the electronic transfer fails, the waiver is void and the claimant's lien rights are fully preserved. An unconditional lien waiver is effective immediately upon execution, regardless of whether payment has actually been received. Canadian construction professionals should strongly prefer conditional waivers to protect their lien rights until payment is confirmed.

The waiver can also be categorized by scope: a progress payment waiver covers a specific payment period and releases lien rights only for the work performed through a specified date, while a final payment waiver covers all remaining work and releases all lien rights upon final payment. Progress payment waivers are exchanged with each progress draw throughout the project, while the final waiver is exchanged at project completion.

A critical consideration in Canadian construction law is the statutory holdback. Most provinces require the property owner to retain 10% of each progress payment as a holdback fund to protect unpaid subcontractors and suppliers. A progress payment lien waiver should not release the owner's obligation to maintain the statutory holdback. The holdback can only be released after the applicable lien period has expired (60 days in Ontario, 55 days in BC, 45 days in Alberta) and no liens have been preserved against the property.

A Canadian Lien Waiver and Release is needed at multiple stages throughout a construction project as part of the payment process. The most common scenario is the exchange of a lien waiver for a progress payment. When a contractor submits a progress invoice or payment application, the property owner or general contractor may require a lien waiver from the previous payment period before releasing the current payment. This practice ensures that lien rights are progressively waived as payments are made, reducing the risk of liens being filed against the property.

Property owners need lien waivers from the general contractor with each progress payment to confirm that the contractor is not accumulating unpaid lien rights against the property. The owner should also require the general contractor to obtain lien waivers from all subcontractors and material suppliers before releasing each progress payment. Under Ontario's Construction Act, the owner has a statutory obligation to retain a 10% holdback from each payment, and obtaining lien waivers helps manage the risk associated with construction projects.

General contractors need lien waivers from subcontractors before making progress payments. The general contractor should obtain waivers from all subcontractors, material suppliers, and equipment rental companies who have supplied labour, materials, or equipment to the project. This protects the general contractor from claims by subcontractors who may assert that they have not been paid, and provides documentation to the property owner that the payment chain is functioning properly.

Mortgage lenders and construction financiers typically require lien waivers before advancing construction loan funds. When the borrower draws on a construction mortgage, the lender will require evidence that all previous payments have been accounted for and that no lien claims are outstanding. This protects the lender's security interest in the property, as construction liens generally have priority over mortgages registered after the commencement of the improvement in most provinces.

Title insurers may require lien waivers before issuing or extending title insurance coverage for properties that have recently undergone construction or renovation work. The title insurer needs assurance that no construction liens will be filed against the property that could affect the insured title.

At project completion, a final lien waiver is needed from all construction participants before the owner releases the final payment and the statutory holdback. The final waiver confirms that all work has been completed, all payments have been received, and all lien rights are released. In Ontario, the holdback can be released after 60 days from the date of substantial completion or the last supply, provided no liens have been preserved. In BC, the holdback period is 55 days, and in Alberta, it is 45 days.

A comprehensive Canadian Lien Waiver and Release must contain several essential elements to be legally effective and properly protect all parties involved. The document must specify the waiver type (conditional or unconditional) and the waiver scope (progress payment or final payment). A conditional waiver is effective only upon receipt of payment, while an unconditional waiver is effective immediately. A progress payment waiver covers work through a specific date, while a final payment waiver covers all remaining work and releases all lien rights.

The claimant (the party waiving lien rights) must be identified with their full legal name or registered business name, business address, phone number, and role on the project (general contractor, subcontractor, material supplier, equipment rental company, or labourer). The property owner must be identified with their full legal name and mailing address. The project must be described with the property address, project name (if applicable), and a description of the work performed or materials supplied.

The payment information must be clearly stated in Canadian dollars (CAD), including the payment amount being made or acknowledged, the date through which the waiver covers work performed (the "Through Date"), and the date the waiver is executed. These details define the precise scope of the waiver and ensure that future work and payments are not inadvertently covered.

The statutory holdback acknowledgment is a critical element unique to Canadian construction law. The waiver should explicitly acknowledge that the owner is required to retain a statutory holdback (typically 10%) under provincial construction lien legislation, and that the waiver does not release the owner's obligation to maintain the holdback for the prescribed lien period. In Ontario, the holdback must be maintained for 60 days under the Construction Act. In BC, the period is 55 days under the Builders Lien Act. In Alberta, the period is 45 days under the Builders' Lien Act.

The exceptions and reservations clause allows the claimant to exclude specific items from the waiver, such as disputed change orders, pending claims, or retainage amounts. This is important because the claimant should not waive rights to amounts that are genuinely in dispute. The waiver should clearly state what is being waived and what is being reserved.

The waiver and release clause must reference the applicable provincial construction lien legislation and clearly state the scope of the lien rights being waived. In Canada, this means waiving construction lien rights, builders lien rights, trust claim rights, and any other statutory rights under the applicable provincial legislation. The clause should include a warranty that the claimant has paid or will pay all labourers, subcontractors, and suppliers from the payment received.

The governing law clause must specify the province whose construction lien laws govern the waiver. This is critical because lien laws vary significantly between provinces. The representations and warranties section should confirm that the claimant has the authority to execute the waiver, has not assigned or encumbered the lien rights, and that no other person has rights through the claimant for the work covered.

Optional elements include a Commissioner for Oaths or Notary Public sworn declaration, which adds credibility and may be required by the owner, lender, or title insurer. Confidentiality and indemnification clauses may also be included depending on the parties' requirements.