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Mortgage Squad Advisors
Construction Liens

Construction Lien Mortgage — Clear a Contractor's Lien From Your Title

A contractor or supplier registered a lien on your property? It clouds your title and, if the contractor preserves and perfects it on time, it becomes a court action that can end in a sale of the property. We refinance against your equity to pay it out or vacate it — fast — so your build and your title move forward.

Equity-based approvalPays out or vacates the lienFast on tight deadlinesDisputed claim + security into courtClears titleConfidential
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Written by the Mortgage Squad Advisors Editorial Team · Reviewed by Surrayya Afzal, Principal Broker, FSRA #M14001433 · Updated October 2026 · Reviewed quarterly; next review January 2027

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Lien on your title? Pay it out or vacate it

Enter the lien amount, home value and mortgage balance to see the room at 80% and 75% LTV, and the cash needed to vacate a disputed lien.

$160,000
Room at 80% LTV (alt-A)
$125,000
Room at 75% LTV (private)
$50,000
Cash to vacate (claim + 25% security, max $250k)

Illustrative — not a quote. Room before lender, broker and legal costs; actual loan-to-value limits depend on the lender, property and file. Vacating requires paying the full amount claimed plus security for costs into court (Construction Act, s.44).

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A construction lien is one of the most time-sensitive claims a homeowner can face. A contractor or subcontractor who says they weren't paid registers it against your title, and construction-lien law moves on strict statutory deadlines: a lien that is preserved and perfected on time becomes a court action that can end in a sale of the property. Meanwhile your renovation stalls, you can't refinance or sell, and interest and legal costs mount. If you have equity, we can refinance to pay the claimant out — or, if the claim is genuinely disputed, pay the full amount claimed in the lien plus security for costs (25% of the claim, up to $250,000) into court to vacate the lien — so your title clears and the project moves.

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The short answer

A construction lien mortgage is an equity-based refinance (B-lender or private) that pays out or vacates a contractor's/builder's lien so your title clears. Construction liens carry strict statutory deadlines and, once preserved and perfected, become a court action that can end in a sale, so speed matters. Where the amount is genuinely disputed, the lien can be vacated: you pay the full amount claimed in the lien plus security for costs (25% of the claim, up to $250,000) into court while the dispute continues.

What is a construction lien mortgage?

A construction lien mortgage is financing arranged to clear a construction (contractor's) lien — a registered claim by a contractor, subcontractor or supplier who wasn't paid for work on your property. Because the lien clouds your title, a bank won't refinance until it's gone. An equity-based lender advances funds so your lawyer pays the claimant out (or, to vacate a disputed lien, pays the full amount claimed in the lien plus security for costs (25% of the claim, up to $250,000) into court), and the charge comes off title.

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Could consolidating cut your monthly payments?

See how rolling high-interest debt into a mortgage could change your monthly payments at alt-A or private pricing — the lenders who work with this kind of file.

Lender tier
$60,000
Debt you could consolidate (to 80% LTV)
$1,800/mo
Now (min payments ~3%/mo)
$388/mo
Rolled into mortgage
$1,412/mo
Estimated monthly cash-flow saving

Illustrative — not a quote. Assumes 6.04% (alt-a / b-lender) over a 25-year amortization, up to 80% of home value. A lower monthly payment does not mean a lower total cost: consolidating over a longer amortization can increase total interest. Lender and broker fees are not included; your actual rate depends on your file.

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Do I qualify for a construction lien payout mortgage?What documents will I need?How fast can this close?
On this page
  1. Why a construction lien is more urgent than an ordinary judgment
  2. Pay it out, or vacate it into court — which applies to you
  3. How the equity refinance works
  4. Homeowner or contractor — who this is for
  5. FAQ

Why a construction lien is more urgent than an ordinary judgment

A construction (or ‘builder’s’ or ‘mechanic’s’) lien is a creature of provincial construction-lien statute — in Ontario, the Construction Act. Unlike a general creditor who has to sue, win a judgment, and register a writ, a contractor or supplier who claims they weren’t paid can register a lien directly against your title for work or materials supplied. That immediacy, plus strict statutory deadlines, is what makes a construction lien one of the most time-sensitive claims a homeowner can face. In Ontario a contractor’s lien generally must be preserved (registered) within 60 days of completion, abandonment or certified substantial performance, and then perfected by starting a court action and registering a certificate of action within 90 days after the last day the lien could have been preserved3.

The practical upshot: a perfected construction lien is a lawsuit against your property that can end in a court-ordered sale, and it blocks any refinance or sale in the meantime. That is why these files are treated as urgent from the first call, and why private capital — which can fund in days — is often the right tool even though it costs more than a bank.

Pay it out, or vacate it into court — which applies to you

There are two clean ways off. If you owe the money — the work was done and the invoice is valid — the solution is to pay the claimant and register the discharge. An equity refinance funds that payout at closing, the lien comes off, and you’re left with clean title and one mortgage.

If you genuinely dispute the claim — defective or incomplete work, an inflated amount, or a claim by someone you already paid — you don’t have to simply hand over the money. Your lawyer can apply to vacate the lien by paying the full amount claimed in the lien plus security for costs (25% of the claim, up to $250,000) into court3. Once the court order is obtained and registered, the lien comes off title (so you can refinance or sell) while the underlying dispute is fought out separately. We size the financing for whichever route applies, and the legal steps are handled by your construction-lien lawyer.

How the equity refinance works

The mechanics mirror any lien payout, and your money never passes through your hands. An alternative lender advances a mortgage sized to cover your existing balance plus the lien payout (or the full amount claimed plus security for costs, 25% of the claim up to $250,000, to be paid into court) plus costs. At funding, the money flows to your real estate lawyer in trust, who pays the claimant or the court, obtains the discharge or vacating order, and registers it so the lien is removed.

Qualifying is equity-first: generally the new mortgage stays under about 80% loan-to-value at alt-A, or 65–75% on private*, so meaningful equity is what makes it work. You don’t need clean title to start — clearing it is the point. Every lender, broker and legal fee is disclosed in writing before you commit.

Homeowner or contractor — who this is for

Most of these files are homeowners mid-renovation who got hit with a lien — sometimes from a subcontractor they never hired directly, because construction-lien law lets those down the chain lien the property. If you have equity, we clear it so your build and your life move forward.

We also help self-employed contractors and small builders whose own files get complicated by liens, holdback disputes, or cash-flow gaps between draws — often the same borrowers who need self-employed or private financing anyway. Either way, the goal is the same: clear the title problem now, then map the exit back to conventional pricing.

What you get

Why Canadians choose Mortgage Squad Advisors.

Equity-based approval — driven by your home's value, not just income or credit
Pays a valid lien claimant out in full so the lien is discharged
Vacates a disputed lien: pay the full amount claimed in the lien plus security for costs (25% of the claim, up to $250,000) into court
Fast private capital where a lien deadline is imminent
Bundles multiple liens/holdback claims into one payout where needed
Existing first mortgage can stay in place — second-mortgage payout where cheaper
All lender, broker and legal fees disclosed in writing before you commit
Plan to refinance back to A-lender pricing once title is clean
How it works

Three simple steps, no pressure.

  1. 1

    Title + lien snapshot

    Send the property address and the lien details — claimant, amount, and the registration/expiry dates. We estimate available equity and map options quickly. If a deadline is close, tell us — construction liens don't wait.

  2. 2

    Pay out or vacate

    If the debt is valid, we size financing to pay the claimant and discharge the lien. If it's genuinely disputed, your lawyer can vacate it — pay the full amount claimed in the lien plus security for costs (25% of the claim, up to $250,000) into court — so title clears while the dispute is litigated separately.

  3. 3

    Clear title + plan exit

    Your lawyer registers the discharge or the vacating order, your title comes back clean, and the project resumes. We set a refinance trigger to move you back to A-lender pricing as your file heals.

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FAQ

Common questions, answered.

Don’t see yours? Ask Maya — instant answer, any time.

Can I refinance with a construction lien on my title?
Not with a bank — a lien clouds your title and A-lenders won't fund. But an alt-A or private lender will refinance against your equity specifically to pay the lien out (or fund the full amount claimed plus security for costs, 25% of the claim up to $250,000, to be paid into court to vacate it), so it's discharged at closing and your title clears.
What's the difference between paying out and vacating a lien?
Paying out means you owe the money and the claimant is paid in full, then the lien is discharged. Vacating means you dispute the claim — your lawyer pays the full amount claimed in the lien plus security for costs (25% of the claim, up to $250,000) into court; once the court order is obtained and registered, the lien comes off title so you can refinance or sell, while the dispute is litigated separately. We size the financing for whichever applies.
How fast can this close?
Private construction-lien files can often fund within days once an appraisal is done and the lawyer is instructed. Because construction liens run on strict statutory deadlines, tell us the key dates immediately — the more runway, the cheaper and wider your options. No honest broker can promise a timeline sight-unseen; it depends on your equity, the property and the deadline.
How much equity do I need?
Generally the new mortgage (existing balance + payout + costs) needs to stay under about 80% of value at alt-A, or 65–75% on private.basis Illustrative and varies by file. A home with meaningful equity can usually clear a lien and sometimes consolidate other debt at the same time.
A subcontractor I never hired put a lien on my house — is that legal?
Often, yes. Construction-lien statutes let subcontractors and suppliers down the chain lien the property they worked on, even without a direct contract with you — which is exactly why these liens surprise homeowners. The remedy is the same: pay a valid claim out, or vacate a disputed one into court. Your exposure to a subcontractor is usually limited to the 10% holdback you were required to keep from your contractor — ask a construction-lien lawyer before paying a subcontractor's claim in full.
What does it cost?
Alt-A runs roughly 100–200 bps over A-lender pricing; private is higher — CMHC put the average single-family rate at the 25 largest private mortgage investment entities at 9.6% in Q3 2025CMHC — plus a lender and broker fee, all disclosed in writing. It's temporary, and it's almost always cheaper than a stalled project, mounting legal costs, or a forced sale.
Can I get back to a normal mortgage afterward?
Yes — that's the plan. Once title is clean and your file heals, we refinance you back to A-lender pricing, typically in 12–24 months. See our exit-strategy guide.
Is this the same as your judgment and lien service?
It's the construction-lien-specific version of it. For other liens and judgments — writs, tax liens, court judgments — see our judgment & lien mortgage page. The financing mechanism is the same; construction liens just move faster and have their own statutory rules.

Related products

Judgment & lien mortgage (hub)Private mortgageB-lender mortgageSelf-employed mortgageAlternative lendingGuide: remove a lien from titleGuide: judgment vs writ vs lienMortgage to pay off a judgmentMortgage with a lien on title

Sources & references

Figures on this page are sourced below and re-checked each quarter. Rates, insurer rules and lender policies change — confirm anything you plan to act on with a licensed advisor.

  1. 1. Canada Mortgage and Housing Corporation (CMHC), Residential Mortgage Industry Report (Q3 2025) — Among the 25 largest mortgage investment entities (private lenders), the average interest rate on single-family mortgages was approximately 9.6% in Q3 2025.
  2. 2. Mortgage Squad Advisors rate desk (internal verification), Illustrative alt-A/private pricing and LTV ranges (reviewed August 2026) — Alt-A second mortgages typically price roughly 100–200 bps above A-lender rates, to about 80% LTV; private files typically to about 65–75% LTV. Illustrative, vary by file — not a quote.
  3. 3. Government of Ontario (e-Laws), Construction Act, R.S.O. 1990, c. C.30 (Accessed September 2026) — A contractor’s lien expires unless preserved within 60 days (s. 31) and perfected by starting an action and registering a certificate of action within 90 days after the last day it could have been preserved (s. 36); a lien can be vacated by paying the full amount claimed plus security for costs (25% of the claim, up to $250,000) into court (s. 44).

Ready when you are.

No obligation, and no credit pull to begin. A licensed advisor reviews your file with you, and Maya, our AI assistant, can answer quick questions any time.

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