As per the original contract, I have paid in full for a contract done. Now, the contractor is looking for more money, and is threatening me with a lien. Can anyone place a lien on my property? Is this such a easy thing to do to harass anyone?

OR does someone has to prove with some documentary evidence?

Yes a "mechanics lien" can be placed on a home without court action. You can, get the lien removed with a suit if you can prove the contract was paid. Why is he asking for more money?

Original contract? Did you have him do more than the original contract?

The rules for mechanics liens are somewhat complex and vary from state to state. But generally, a mechanic's lien has to be followed up with a lawsuit against you within a few months or it will expire.

Thanks for replies, here's some clarification. I am a resident of Ontario, Canada. The work scope was not increased - in fact original contract had more things listed than the contractor finished. He charged me for all the material up front, and all the material never showed up. Then during time, he kept asking money almost everyday for more material / labor, so I ended up paying about 30% more than what the contract was for. The work was supposedly 3 weeks, it is still not finished after 3 months as he shows up very infrequently, and he is asking me to pay another round of payments or he will put a lien on property.

And on top of that, he did something wrong which made my basement flooded (never hap'd in 30 years) - and now I have to get that fixed another couple of thousand dollars.

I am really frustrated with this guy, not sure where to look for help. Can someone please explain how the lien works and what can I do about it?

... Can someone please explain how the lien works and what can I do about it?

This (http://www.ontarioconstructionlaw.ca/lien%20FAQ.htm) link explains that what, in Ontario, is called a construction lien works in much the same way a mechanic's lien works in the 'states.

Your contractor is threatening to register a lien. I wouldn't worry too much until he puts his money where his mouth is. And, if he does, (if it works like it does here) it won't do him any good unless you intend to sell or mortgage the property within a short period after the registration of the lien.

Sue him.
I'm sorry. I have a lifelong friend who is a builder and I've never had to go through this.
Contact HGTV, maybe Holmes on Homes will save the day.

If you paid him for work he did not do according to a written agreement, sue him for the value of the work not done