The BC Builders Lien Act – Whether you are the supplier of materials used on a project, a subcontractor, or the prime contractor, the BC Builders Lien Act has significant ramifications for most parties within a construction project. It provides rights and imposes obligations in addition to parties respective rights under their contracts; and is the Law in BC and must be adhered to. As such, if you are involved with construction in BC, you need to be aware of what the Act could mean for you.
So what is a Builders Lien? (BC Builders Liens)
A builders lien allows contractors, subcontractors, or workers to recuperate the money owed if they are not paid for work done and/or materials supplied on a construction project. When a builders lien is filed, it is registered as a charge against title to the property under construction. This gives the lien claimant some security for payment that is owned.
If you are seeking the protection of a builders lien, you must be aware of the strict timelines and filing requirements associated. If you miss the deadlines or do not properly prepare and register the forms required, you will lose your opportunity to be protected by a lien.
Important things you need to know:
- Filing a builders lien requires that a completed “claim of lien” be registered at the appropriate Land Title Office, along with a filing fee. This form includes:
- The legal names of any person or company that owes money to the lien claimant
- A legal description of the related property (which the lien is being filed against)
- A description of what work was done and/or material supplied
- Detailed accounts of the amount owed, including when it became due
- The amount owing to you must be over $200, or else you won’t be allowed to file a lien.
- Because a builders lien is registered against the property, it can hinder a landowner’s ability to sell the property or maintain mortgage financing. As a result, it is in the best interest of a landowner to take steps to clear the lien. Sometimes there may be a dispute about whether the claim is valid or the owner might not be the person at fault. In order to keep the property from being tied up, a landowner can apply to simply pay money into court. The court can then order the lien (and its effect) removed from the property.
- The deadline to file a builders lien is 45 days
- In order to file a builders lien, you must act quickly as there is generally a deadline of only 45 days to file a lien after the project is substantially completed, abandoned, or ended. One common event that triggers this 45-day window is when a certificate of completion is issued. It is wise to seek legal advice on these matters to ensure you do not miss deadlines and lose the protection of a builders lien.
Does this apply to me?
BC Builders Liens apply to more than just contractors, subcontractors, architects, engineers, material suppliers, or works – it also applies to owners and lenders as well. If you are involved with a construction project, chances are, you have obligations to comply with, and/or rights to pursue.
While the BC Builders Lien Act can provide a lien against the land and building where work was performed, it also creates additional obligations on many parties involved. Each party paying out to the company he/she contracted with, retails a holdback of 10% of the amount owing until the work has been completed and no applicable liens have been filed (in the 45-day window). The 10% holdback is “notional” for everyone except the owner, who must create an actual holdback account of funds.
The owner is required to open a trust account at a financial institution and keep a holdback amount there until the work or contract has been completed and no liens have been filed within the 45-day window. This fund is used to pay for any liens against
What it means for you
If you are a prime contractor or subcontract on a construction project, be prepared to only receive 90% of the amount due while the other 10% is held in a trust account by the owner – pending substantial completion of the work you are doing.
Conversely, if you are a material supplier or worker, you should be receiving 100% of any money owed to you as the holdback provisions of the Act do not apply to you.
Also note, in most instances, there must be an actual trust account opened at a financial institution by the owner; unless the total value of work and materials under contract is less than $100,000.
Summary
The BC Builders Lien Act is an important protection for parties involved in a construction project. Whether you are a material supplier, the prime contractor, or the owner of a construction project, the Act provides both obligations and protections. Whether you are a landowner, contract or subcontractor, you need to remember to create a 10% holdback fund to account for any potential liens. Also, if you believe you are entitled to money for work or materials that you haven’t been compensated for, you must make sure you file a builders lien within 45 days of when a project is substantially completed, abandoned, or ended.
The BC Builders Lien Act has many intricacies that go beyond what has been covered in this article. Complications can arise around subjects like “who is owing?” and “what if I missed the deadline to file a lien?” You may feel like you are entitled to the money that was held back from you under the BC Builders Lien Act, and the owner doesn’t agree. In that case, you might need to obtain a court order.
It is always wise to seek the advice of a legal professional to make sure you do not miss deadlines or lose the protections of a builders lien. An experienced construction lawyer can help you navigate the complexities and unique situations that may arise for you as an owner, contractor, subcontractor, etc.
Disclaimer – The information contained herein is of a general nature. It is not intended to be legal advice and it is not intended to address the exact circumstances of any particular individual or entity. You should not rely on or act upon such information without receiving appropriate professional advice and without a thorough examination of your particular situation.
