Huron Perth Landowners Association – Press Release – January 11, 2016 – UPDATE
There have been construction liens registered on property profiles in the St Columban Wind project for the past 9 months. Four construction liens and four court actions are still registered for $30 million.
This story first rose to attention in early 2015 when a landowner was reviewing his parcel register at Service Ontario in conjunction with obtaining his Crown Land Patent. He was surprised to find a demand debenture for hundreds of millions of dollars registered on his parcel registry at Service Ontario. In June 2015, while checking parcel registers for the St. Columban Wind Project of 15 turbines, it was discovered that two construction liens had been registered in the amount of over $2 million.
In October 2015, after reports that the liens may have been removed, Dave Hemingway, a reporter for the Landowner Magazine, checked again and discovered that there were now six construction liens on the properties valued at over $32 million.
In addition, there were certificates registered for three Superior Court Actions regarding three of the liens. That number had risen to six court actions when checked again on November 16, 2015. At the time, one of the Superior Court Actions named as defendants: 21 leaseholders, four wind companies, one bank, as well as two Farm Financial Corporations, and two credit unions. Mr. Hemingway learned on January 4, 2016 that two small liens for approximately one million each have been deleted so far leaving four liens amounting to $30 million.
“It appears that the banks are now concerned about the liens as, of course, we have learned, they do not like to be second or third in line when securing loans or mortgages,” said Mr. Hemingway. “Some bankers are still saying they will consider loans to leaseholders after they have checked with their bank’s legal department. However, according to reports, other banks are refusing loans for some farm operations due to the liens. Landowners are wondering, “Why haven’t the wind companies paid their contractors?”
Mr. Hemingway added: “If landowners are approached to sign a wind turbine lease, they may want to read the fine detail and seek appropriate legal advice before signing any documents. People should keep in mind that government subsidies could be reduced in the future as has happened in other countries. If so, will the wind company be able to pay their debts? If not will the Landowner be on the hook? Will the property have to be sold?”
Background Information on Construction Liens
- The Construction Liens Act (1990) helps ensure labourers and contractors are paid in full for their work.
- The property owner is ultimately responsible for paying the costs of all improvements to property, including in cases involving the construction of a wind turbine on the property.
- The wind developer pays the leaseholder for the use of his property to erect a turbine for electricity production on the leaseholder’s land for up to 50 or more years. The leaseholder agrees to let the turbine company use his land for their purposes.
- In cases where the wind company has not paid contractors for their work, contractors may put a lien on the physical assets of the property until payment is received. The developer may pay off the liens; however, if contracts are not paid in full then a contractor could force a sale of the property in order to ensure payment.
- If the contracts are not paid, the leases could be sold to another company that could pay off the liens and possibly own both the turbines and the leases.
The leaseholder or farmer is unlikely to be able to sell his land until the lien is paid. This could tie up a property or farm in court battles for months or years.
- As well the property owner may have legal bills to get the liens off the property register and be able to sell his/her property.
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