Wind Turbines and Construction Liens
A Cautionary Tale
An unforeseen complication with wind turbines has recently come to light. Construction Liens are being registered against properties home to wind turbines. Not all, of course, but in instances where a construction lien has been registered as a result of unpaid contractors.
The Construction Lien Act allows contractors to place a lien against a property where the property has been improved and no payment has been made. The lien creates an interest in the land in favour of those who supply materials or services, thereby creating security. In a wind-turbine land-lease scenario the land may be subject to a construction lien, despite the landowner having little to no knowledge of the turbine-construction project or control over whether a contractor has been paid. Scary stuff!
The lien will not be removed unless the amount owed has been repaid in full. Repayment may occur by action or the Construction Lien Act entitles the contractor to recover costs from the sale of the property. There may be some room for negotiation with either the developer or contractor, but of course there is no guarantee. Until such time as the lien is removed from the property, the encumbrance will make the parcel unattractive for other plans.
Prior to accepting a developers proposal to provide land for the installation of wind turbines, ensure that the lease agreement is read carefully. A municipality (or a private landowner for that matter) does not want to enter into a situation where their lands could be subject to unforseen and unwanted encumbrances.
Addressing Municipal Law issues throughout the province of Ontario