The New Lien Right for the Supply of Design: Impact on Design Professionals and Owners

On January 1, 2026, several anticipated amendments to the Construction Act of Ontario (“CA”) came into effect including in respect of adjudication, proper invoices, and a new mandatory annual holdback release. A lesser talked about amendment has, for the first time since 2018,[1] expanded lien rights under the CA by creating a rebuttable presumption that those who supply pre-construction design services (“Design Professionals”) to a project before construction begins, can make a lien claim if an owner retains a holdback for their services.

Design Professionals contribute significant value to a project before shovels even hit the ground. They create blueprints that guide development and help owners obtain building permits and other approvals.[2] They also often work like general contractors do as they may subcontract consultants and other professionals for their expertise when designing.[3]

Despite the value of the work that they provide, prior to January 2026, Design Professionals did not have express lien rights under the CA. Architects were the only professionals with lien rights under the CA. This gap in the legislation meant that, upon a narrow reading of the CA, a design consultant that performed work on a project did not have an automatic right to lien a property for their work if they did not get paid.

The common law has, to a certain extent, already sought to give a generous interpretation to the CA so that pre-construction design work could be considered an “improvement” that could give rise to a lien claim even if a project never began.[4] However, to obtain this protection, Design Professionals had the burden of bringing a claim and proving that their work met the definition of “improvement”, and judges did not always rule in their favour.[5]

In 1246798 Ontario Inc v Sterling,[6] for example, an architect who provided designs that helped an owner obtain municipal site plan approval tried to register a lien claim after the owner abandoned the project and withheld payment. A motion judge initially denied the architect’s lien claim, finding that his designs had not increased the value of the land and he was barred from making the claim because the planned improvement never proceeded. It was not until he appealed the decision to the Ontario Divisional Court that he was granted the lien.

A CA review and report completed by Duncan Glaholt for the Ministry of the Attorney General in 2024, titled: 2024 Independent Review: Updating the Construction Act (commonly known as the Glaholt Report), highlighted these gaps in the legislation, and proposed an amendment that was ultimately adopted into the CA in the form of the newly added subsection 14 (4).

The Positive and Negative Implications of 14(4) on Design Professionals and Owners

The benefits to Design Professionals from this new change are significant. First and foremost, let’s not underestimate the importance of the increased payment security such a lien right will grant to these parties for early services supplied even before an improvement is commenced. No longer will such service providers bear the onus of having to bring a claim and make their case before a court for why lien rights should attach to their work. The amendment will eliminate ambiguity, bring clarity to this area, and eliminate the burden and cost for Design Professionals of litigation. This will reduce lengthy court cases for these parties. Design Professionals should also enjoy the other rights afforded to service providers and suppliers under the Act, such as the prompt payment and dispute interim adjudication rights.

While this new legislative addition is certainty a positive for Design Professionals, they need to be aware that lien rights are not a sure thing. Such work is only considered lienable work and subsection 14(4) only applies if the owner is unable to prove that the services provided did not enhance the value of the land they were supplied for. Owners may argue that initial unused, or rejected design work for instance, are not lienable. To avoid subsection 14(4), owners may also structure their contracts to isolate or carve out certain work such as perhaps preliminary design work, from the project work, and split design work under separate contracts.

Additionally, subsection 14(4) may increase administrative burdens on both Design Professionals as well as Owners, around documenting the holdback retained, invoicing, invoice review, and around raising objections. This is something the parties should be aware of and prepare for.

For owners, some benefit can also be drawn from this, including more certainty in the industry respecting early design work, and less time and cost for litigation for them as well. With this said, in addition to the anticipated administrative burden highlighted above, Owners now risk increased liens on their lands, even before any actual improvement has been started, or even if their project does not proceed, and the burden of proof shifts to them to have to demonstrate that their lands were not enhanced by the design work in question.

No doubt subsection 14(4) is significant to the construction industry. It certainly should add needed clarity and certainty in this area of law and provide Design Professionals with protections long argued for. However, subsection 14(4) will bring some burdens for both Design Professionals and Owners as well, which both parties should be cognizant of to avoid undue risk. With some proper preparation however, we believe the risks pointed out above can be minimized and made more manageable.

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