Notice of Interest under the Builders Lien Act – An Important Protection for Landlords
Section 1 of the Builders Lien Act, S.B.C. 1997, c. 45 (the “Act”) defines an “owner” as anyone with a legal or equitable interest in land. This means that landlords, tenants, or others may be “owners” of the land for the purposes of the Act. This also means that there may be more than one “owner” of the land for the purposes of the Act.
Section 3(1) of the Act provides that a builders lien attaches to an owner’s interest in land if he has prior knowledge of the work, even if he does not request it. This means, for example, that a lien claim may be filed against an owner’s interest in the land because his tenant failed to pay for improvements to its leased space. The landlord may know that work is being undertaken on the land, but he may not foresee that his tenant would not pay for the work. While a lien claimant must establish that the owner “knew” about the work, the test for establishing such knowledge is easily met unless the owner truly did not know that the work was being, or would be, undertaken on the land.
Fortunately for “owners”, the Act provides a means of protection from liability for unauthorized work by allowing “owners” to file a “notice of interest” in the Land Title Office of British Columbia. The notice of interest would appear on a title search for the lands and notify others that the owner’s interest in the land would not be bound by a lien claim unless the work was undertaken at the express request of the owner. The latter qualification is an important counterbalance in favour of lien claimants and precludes an owner from relying on a notice of interest where he has requested the work in question. Our courts have interpreted the phrase “express request” very strictly such that lien claimants’ arguments that the terms of lease documents which contemplate or authorize certain work are, at best, implied requests and do not nullify the effect of a notice of interest.
An “owner” who wishes to avoid lien liability for unauthorized work should consider filing a notice of interest.