Lien Bonds
A construction lien registered against title stops draws, delays closings and puts a lender’s priority at risk. A lien bond substitutes surety security for the land, so the lien can be vacated and the project can carry on while the underlying claim is decided.
What Is a Lien Bond?
A lien bond — called a release of lien bond in New Brunswick’s legislation, and known in the trade as a construction lien bond or simply “bonding off” a lien — is substituted security. It is posted with the court in place of cash, and on the resulting order the lien stops attaching to the land and becomes a charge on the security instead.
Three parties are involved: the principal bonding the lien off, usually the general contractor, owner or developer; the surety issuing the bond; and the lien claimant, whose claim the bond now secures. Title comes clear. The claim does not go away.
What posting a lien bond achieves:
- Removes the lien from title so the property can be sold, refinanced or mortgaged
- Restores the lender’s priority so construction advances can resume
- Satisfies a contractual obligation to keep title clear, which many supplementary conditions impose on a short deadline
- Keeps the disputed money working in the business rather than paying it into court
What a lien bond does not do matters just as much. The claim survives intact and runs on the same timetable, now against the bond rather than the land. Nothing about posting security shortens the dispute, reduces the amount claimed or improves your position on the merits. The claimant keeps every right it had and still has to prove its case; if it succeeds, the surety pays out of the bond and then recovers from the principal, because a surety bond is a guarantee rather than insurance.
Getting the security back early is deliberately hard. Courts treat posted security as statutory protection for the claimant and will not release or reduce it unless satisfied there is no reasonable prospect of the claim succeeding. That is the practical argument for resolving the underlying dispute quickly rather than treating the bond as the end of the matter.
Who Needs One
When a Lien Bond Is the Right Tool
Liens get registered for all sorts of reasons, and not every one of them calls for a bond. These are the situations where bonding off is usually the fastest way through.
A Trade Has Liened Your Project
The classic case. A general contractor liened by a subcontractor or supplier needs the owner’s title clear to keep progress advances moving and to avoid breaching its own contract.
A Sale or Refinancing Is Pending
A registered lien will stop a closing. Purchasers and their lenders do not complete against encumbered title, and the transaction waits until the lien is discharged or vacated.
The Lender Has Stopped Advancing
A mortgagee that advances in the face of a registered lien risks losing priority, so the practical response is to halt the draw. Clearing title is what restores the flow of funds.
The Contract Gives You Days
CCDC 2 itself contains no obligation to discharge liens, but supplementary conditions frequently add one — sometimes on a ten-day deadline, with the owner entitled to act and deduct its costs. Ten days is short if security has to be arranged from scratch.
You Dispute the Claim
Where a lien is inflated, premature or answerable by set-off, bonding off separates the commercial problem from the legal one. The project proceeds while the claim is tested on its merits.
Timing Is Driving the Decision
Turnaround on a vacating application varies by registry, and land registration can take further weeks after the order issues. Where a closing or a draw is date-driven, starting early matters more than anything else.
How Much Security
What the Court Requires, Province by Province
The amount of security needed to vacate a lien is set by provincial legislation, and Atlantic Canada is not consistent about it.
Two provinces give you a formula you can calculate before you call anyone. Three leave the number to the court, which means the bond amount cannot be settled until counsel has a view on what will be fixed. That distinction drives the whole timeline, so it is worth knowing which regime you are in before a lien is ever registered.
Nova Scotia
Builders’ Lien Act, s.29(4). On application, the court may allow security for — or payment into court of — the amount of the claim, and may then order the registration vacated. The Act sets no percentage and no cap, so quantum is judicial discretion, with an allowance for costs customary on top of the lien value. A court order is required. Where the certificate of action has not yet been registered, s.29(5) allows the application to be made without notice.
New Brunswick
Construction Remedies Act, ss.72–74. The clearest regime in the region, and the newest — the Act replaced the old Mechanics’ Lien Act in 2021. On an application without notice, security must equal the full amount claimed plus the lesser of 25 per cent of that amount and $50,000 for costs. Section 74 expressly makes a release of lien bond acceptable security and prescribes Form 16 for it, issued by an insurer licensed to transact guarantee or surety insurance.
Prince Edward Island
Mechanics’ Lien Act, s.53(1). A judge may receive security for, or payment into court of, the amount claimed in a registered claim of lien together with such costs as the judge fixes, and may then order the registration discharged. There is no statutory percentage and no cap. The Act does not name bonds specifically, so the security has to satisfy the judge on its face.
Newfoundland and Labrador
Mechanics’ Lien Act, s.26. The court may allow security for the amount of the claim together with the claims of other existing lien claimants, plus costs it fixes — a wider exposure than elsewhere. Section 26(4) expressly contemplates a bond, which then takes the place of the property discharged. Note also that Newfoundland has the shortest registration window in the country, at thirty days.
Ontario, for Comparison
Construction Act, s.44. Worth knowing if you bid outside the region: the full amount claimed in the lien, plus the lesser of 25 per cent of that amount and $250,000 as security for costs. A lien bond is expressly permitted. The amendments to the Construction Act that took effect in January 2026 did not change s.44.
A Note on Prompt Payment
Nova Scotia passed amendments in 2019 and 2022 that would rename the statute the Builders’ Lien and Prompt Payment Act and create an adjudication authority, but neither has been proclaimed in force and the regulations remain in development. New Brunswick’s prompt payment and adjudication legislation received royal assent in 2023 and is likewise not yet proclaimed. Prince Edward Island and Newfoundland and Labrador have none. Until that changes, existing lien deadlines govern — in Nova Scotia, sixty days to register and one hundred and five days to commence the action and register the certificate, after which the lien ceases to exist.
Amounts, deadlines and procedure are set by statute and by current practice in each province, and they change. This page is general information rather than legal advice — confirm the numbers with counsel on a live file before you commit to a security amount.
For Contractors
Why Surety Capacity Matters Before a Lien Lands
Speed Comes From Preparation
A surety that already holds your current financial statements, work-in-progress schedule and indemnity agreement can move in hours. A surety meeting you for the first time, mid-dispute, cannot.
A Bonded Project Is an Easier File
Where performance and payment bonds are already in place on the job, the surety knows both the project and the account. The terms available on a lien bond are materially better as a result.
Security Is the Real Variable
A lien bond backs a live, disputed money claim, so sureties commonly look for security — cash, a letter of credit or a collateral charge. Strong accounts with an established facility can see that reduced, and that reduction is the whole practical difference between a bond and simply paying into court.
For Owners, Developers and Lenders
Clearing Title Without Draining the Account
Title Clears, the Deal Proceeds
Once the order issues and is registered, the land is unencumbered. Closings, refinancings and draw schedules can be rebuilt around a date rather than an open dispute.
The Claim Is Still Tested
Bonding off is not a concession on the merits. The claimant must still prove entitlement and quantum, and an inflated or unfounded lien fails on the same evidence it would have failed on before.
Plan for the Registry, Not Just the Court
An order is effective when it issues and is entered, but certification at the land registry can take further time, and counterparties generally act on what title shows. Build that gap into the schedule.
The Alternative
Lien Bond or Payment Into Court
Every province allows the same application to be satisfied with cash instead of a bond. It is the identical court step for the identical amount — the only question is what you hand over.
Posting a Lien Bond
- The disputed sum stays in the business and keeps funding payroll, materials and the next project
- Where the surety takes partial security rather than full, the cash-flow saving is real
- The bond has to satisfy the court on its form and wording, not only its amount
- The bond is released when the action resolves and the court returns it to the surety
Paying Into Court
- The same statutory amount leaves the business immediately and sits idle until the action ends
- No underwriting, no indemnity agreement and no form to negotiate — money is money
- Getting it back early takes a further application on a high threshold, the same as for a bond
- On a small lien it is often the cleaner answer, because the process is shorter than arranging security
The honest version is this: a lien bond only wins on cash flow to the extent the surety accepts partial security. Where a surety requires full collateral, the bond converts idle cash in court into idle cash with the surety, and adds an underwriting process on top. That is why an established surety facility, and an already-bonded project, change the answer so much. On a large lien, on a long dispute, or where the money is committed elsewhere, the bond is usually the better instrument; on a small lien expected to settle in weeks, paying in is often simpler.
Interaction With Payment Bonds
How a Payment Bond Changes the Picture
A CCDC 222 labour and material payment bond and a construction lien are parallel remedies, not alternatives. A payment bond does not stop a subcontractor registering a lien, and it does not clear one off title. What it does is make the underlying payment problem easier to solve — and make a lien bond easier to obtain if one is still needed.
What the Payment Bond Does
- Pays claimants who hold a direct contract with the principal, without their having to pursue the owner or the land
- Runs on its own clock — notice within 120 days, and suit within one year of the principal’s last work under the 2024 form
- Operates expressly in addition to rights at common law and in equity, so it never displaces a lien
- Is written for a percentage of the contract amount, commonly 50 per cent, reducing as payments are made
What It Does Not Do
- It does not remove a registered lien from title — only payment, settlement, expiry or a court order on posted security does that
- It does not reach parties below the first tier, who may still hold lien rights but no claim on the bond
- It does not extend a lien deadline, which is shorter and set provincially
- It does, however, count firmly in your favour with the surety if a lien bond becomes necessary
The Surety Association of Canada’s own language is careful here: a payment bond will largely alleviate lien problems and let money flow in the normal way. Largely, not entirely — which is why contractors on fully bonded projects still occasionally need to bond a lien off title.
Avoid These
Common Lien Bond Pitfalls
Most of what goes wrong with lien bonds is procedural, and most of it is avoidable given a week’s notice rather than a day’s.
The pattern is almost always the same: the lien lands, everyone focuses on the dispute, and the mechanics of getting security in front of the court get left until the closing date is already at risk.
Bonding the Lien Value Only
Every province requires an allowance for costs on top of the amount claimed. In New Brunswick and Ontario that allowance is a formula; in Nova Scotia, Prince Edward Island and Newfoundland it is whatever the court fixes. Security written to bare lien value will not be accepted.
Using the Wrong Form
Courts scrutinise the instrument, not just the amount, and security that reads as conditional gets refused. New Brunswick prescribes Form 16 for a release of lien bond. Elsewhere, confirm the wording and the named obligee before the bond is issued, not after.
Waiting Until the Action Is Perfected
In Nova Scotia there is a window, before the certificate of action is registered, in which the application can be made without notice. Once the action is commenced and the certificate registered, the route is slower and more contested.
Forgetting the Registry Clock
The court order is one step; getting title to reflect it is another, and it can take weeks. Lenders and purchasers act on what the registry shows, not on a copy of an order in your inbox.
Treating the Bond as the End of It
The bond stays posted and any security stays committed for as long as the action runs. On a multi-year dispute that is a long time to have capital tied up, and it will not come back early without a further application on a high threshold.
Reaching for a Bond on Crown Work
Provincial Crown land and public highways generally cannot be liened in Nova Scotia. The claim becomes a charge on the holdback instead, with its own notice requirements and timelines, and a lien bond is simply the wrong product.
If your work regularly involves subcontractors, the time to establish surety capacity is before a lien is registered, not after. The same facility that supports bid bonds, performance bonds and labour and material payment bonds is what makes a lien bond available at short notice on sensible terms.
Lien Bond FAQs
What is a lien bond?
A lien bond is surety security posted with the court in place of cash, so that a registered construction lien can be vacated from title. The lien stops attaching to the land and attaches to the bond instead. It is also called a release of lien bond, a construction lien bond, or simply bonding off a lien.
Does a lien bond make the claim go away?
No. It moves the claim from the land to the bond and nothing else. The claimant keeps all of its rights, runs on the same timetable and still has to prove entitlement and quantum. If it succeeds, the surety pays from the bond and then recovers that amount from the principal.
How much security is required to vacate a lien?
It depends on the province. New Brunswick requires the full amount claimed plus the lesser of 25 per cent of that amount and $50,000 for costs, and Ontario uses the same structure with a $250,000 ceiling. Nova Scotia, Prince Edward Island and Newfoundland and Labrador set no statutory formula — the court fixes the amount of the claim plus such costs as it considers appropriate. In Nova Scotia an allowance for costs on top of the lien value is customary.
Can I post a bond, or does it have to be cash?
New Brunswick and Newfoundland name a bond expressly in their legislation, and New Brunswick prescribes Form 16 for it. Nova Scotia and Prince Edward Island refer to “security” without naming bonds, and in practice a lien bond is accepted provided it satisfies the court. Cash, a certified cheque and a letter of credit are the usual alternatives.
How quickly can a lien bond be arranged?
Faster than most people expect if you already hold a surety facility, and slowly if you do not. A surety with current financial statements, a work-in-progress schedule and a signed indemnity agreement on file can often move within a day. Underwriting an unfamiliar contractor in the middle of a live dispute takes considerably longer, and the court application and land registration sit on top of that.
Will I have to post collateral?
Often, at least in part. A lien bond backs a disputed money claim with a genuine prospect of loss, which is a different risk from guaranteeing that a competent contractor will finish a job. Sureties commonly look for cash, a letter of credit or a collateral charge. Established accounts with strong financials, and projects that already carry performance and payment bonds, see the requirement reduced or waived.
How long does the bond stay in place?
Until the lien action is resolved by settlement, judgment or expiry, and the bond is formally released by the court and returned to the surety. On a contested claim that can run for years, and any collateral stays committed for the same period.
Can I get the security released before the case ends?
Only on a further application, and the threshold is high. Courts treat posted security as statutory protection for the claimant and generally require the applicant to show there is no reasonable prospect of the claim succeeding. A favourable interim adjudication determination, on its own, has not been enough.
We already have a labour and material payment bond — do we still need a lien bond?
Possibly. A payment bond pays claimants who have a direct contract with the principal, but it does not remove a registered lien from title, and it does not help parties further down the chain who have lien rights but no claim on the bond. Its real value here is that it makes a lien bond considerably easier to obtain.
Can a lien be registered against government property?
Generally not against provincial Crown land, and in Nova Scotia the Builders’ Lien Act does not extend to public streets or highways. Where the Province is the owner, the claim becomes a charge on the holdback rather than on the land, with its own notice requirements. On federal work, claimants look to the payment bond. A lien bond is the wrong instrument in all of these cases.
Has prompt payment changed lien deadlines in Nova Scotia?
Not yet. Amendments passed in 2019 and 2022 would rename the statute the Builders’ Lien and Prompt Payment Act and establish an adjudication authority, but they have not been proclaimed in force and the regulations are still in development. Until they are, the existing deadlines govern: sixty days to register the lien, and one hundred and five days to commence the action and register the certificate.
