A lien on your property sounds worse than it usually is. Ontario homes are sold with liens on them every day. What matters is knowing what is registered against title, in what order the money gets paid at closing, and how much you actually walk away with. This guide covers the common types of liens Ontario homeowners run into and how each one gets handled when the property sells.
What a lien on your Ontario home actually is
A lien is a legal claim registered against the title to your property. It usually secures a debt. As long as the lien is on title, the property cannot be sold or refinanced without dealing with it. That is by design, it is how creditors make sure they get paid.
Almost every Ontario homeowner has at least one charge on title already, the mortgage. Additional liens do not stop you from selling. They just have to be sorted out at closing.
Common types of liens on Ontario homes
Mortgages
The most common charge on title. First mortgages take priority over most other claims. Second mortgages, HELOCs, and private mortgages sit behind the first but still have to be paid out to close.
Property tax arrears
Municipal property taxes are a super-priority claim. In most cases they get paid before the mortgage. If you are more than a few years behind, some Ontario municipalities can start a tax sale process, which is a separate risk you do not want to ignore.
CRA liens
The Canada Revenue Agency can register a lien against your home for unpaid personal income tax, HST arrears (common for self-employed owners), or unremitted payroll deductions. CRA has significant collection powers. In some circumstances CRA claims can outrank even a first mortgage, so a title search that turns one up is worth taking seriously.
Construction liens
Filed by contractors, subcontractors, or suppliers under Ontario's Construction Act when they claim they were not paid for work done on the property. They have strict filing timelines and a statutory expiry, and lawyers deal with them regularly.
Condo corporation liens
A condominium corporation can register a lien for unpaid common expenses. These have super-priority status against the unit and get paid out of the sale proceeds ahead of most other claims.
Judgments and writs of seizure and sale
When a creditor sues and wins, they can register a writ against you personally. If you own real estate in the same jurisdiction, the writ attaches to your properties and has to be dealt with at closing.
How liens get discharged when you sell
This is the part that surprises most sellers. You do not usually have to pay these off before you list. Here is what actually happens.
- Your real estate lawyer orders a title search once a deal is firm. Everything registered against the property shows up.
- The lawyer contacts each lien holder and asks for a written payout statement good through the closing date.
- On closing day, the buyer's funds flow to your lawyer's trust account. Your lawyer directs payment to each lien holder in the required order.
- Once every lien is paid, the discharges get registered against title, and whatever is left goes to you.
When the sale price does not cover the liens
This is the situation that requires the most planning. If the total owed against the property is close to or higher than what the home can sell for, closing is not automatic. Options include:
- Negotiated payouts. Some lien holders will accept less than the full balance to release the lien and close the deal. CRA sometimes does. Judgment creditors often do. This has to happen before closing.
- Personal funds. Bringing cash to closing to cover the shortfall.
- Consumer proposal or bankruptcy. A licensed insolvency trustee can restructure or discharge unsecured debts, which may free things up. This has significant consequences and is not a first choice.
- Walk away from the sale. Sometimes the honest answer is that the numbers do not work and a different strategy is needed, including working with the lender on a mortgage workout.
House with liens or arrears you want off your plate?
Send us the property details. We will come back with a written offer, and if there are liens involved, we will walk through how they would be handled at closing so you know what you actually net.
Where a direct sale fits
Direct buyers like us are used to closings with multiple charges on title. Property tax arrears, HELOCs, second mortgages, and old judgments do not scare us the way they can scare a financed retail buyer, because we are not going through a lender that gets nervous when the sale price is close to the total owed. That predictability is often the difference between a deal closing and a deal falling apart the week before closing.
A direct sale is not always the right answer, especially if there is comfortable equity and time to list. If your situation involves other pressures, our power of sale guide and what to do when you are behind on your mortgage are worth reading alongside this one.
Frequently asked questions
Can you sell a house in Ontario with a lien on it?
Yes. Almost every Ontario home sale involves at least one charge on title, usually the mortgage. Other liens, whether they are CRA claims, property tax arrears, construction liens, or judgments, are typically discharged from the sale proceeds at closing. What matters is that the sale price covers those charges, or that arrangements are made with the lien holder in advance.
What kinds of liens can be registered against my Ontario home?
The most common are mortgages, property tax arrears held by the municipality, CRA liens for unpaid income tax or HST, construction liens filed by contractors, condo corporation liens for unpaid fees, and judgments obtained through the courts by creditors. Each is registered against title and shows up in a title search.
Who gets paid first when a house with liens is sold in Ontario?
Priority follows registration order and statutory rules. Property taxes and CRA super-priority claims often rank ahead of even the first mortgage. Your real estate lawyer runs the title search, contacts each lien holder for a payout figure, and directs funds in the correct order at closing. Whatever is left over goes to you.
Will a lien scare off buyers?
A financed buyer's lender will not fund a mortgage unless title is delivered clear of the seller's liens. That does not stop the sale, it just means the payouts happen out of proceeds at closing. Buyers do get nervous when the sale price is close to the total lien amount, because it raises the risk of the deal falling apart.
What if the sale price does not cover all the liens?
You have a few options. You can negotiate reduced payouts with lien holders in advance, contribute personal funds to close the gap, or in some cases work with a licensed insolvency trustee on a consumer proposal. A real estate lawyer should be involved from the start when the numbers are tight.
Thinking of skipping the listing process?
Share a few details about your Ontario property and we will come back with a no-obligation offer.