Ten Common Builders Lien Act Misconceptions
An important object of the Builders Lien Act, S.B.C. 1997, c. 45 (the “BLA”) is to assist those who contribute their work and materials to a construction project in being paid. However, the use of builders liens and other remedies afforded by the BLA is commonly misunderstood. We regularly hear from individuals who have proceeded (or are about to proceed) based on a misunderstanding of their rights and obligations under the BLA. Often, the result is that creditors and debtors will have compromised their legal positions.
Below is a list of ten (wrong) things we commonly hear:
- “I am out of time to file my lien because I have not worked on the project for more 45 days.” While 45 days is the “magic number” to remember for lien filing deadlines, the start of the time limit changes depending on the contractor’s relationship to the owner. If the contractor was hired directly by the owner, the 45-day deadline will run from when improvement has been completed or abandoned. However, if the owner has hired someone to do substantially all of the work respecting an improvement, the 45-day deadline will not start to run until the contract of that individual (called a “head contractor” in the BLA) has been completed, abandoned or terminated. Also, the issuance of a proper certificate of completion may cause the lien filing deadline to commence before the overall improvement is complete. Suffice to say, the fact that someone has not worked on a project for 45 days may not mean he’s out of time to file a valid claim of lien.
- “I can’t file a lien because I don’t have a written contract”. At the risk of oversimplification, you may file a claim of lien if you have provided work and/or supplied material in relation to a construction project. The fact that a contract has not been reduced to writing does not mean you cannot file a claim of lien. Even where there is no legally-binding contract (i.e., the essential terms of a contract, such as price, have not been agreed), one may claim for the estimated value of the work.
- “I have to apply to court to remove an expired lien”. Not always. Where a claim of lien has expired without being perfected (i.e, an action in the Supreme Court of British Columbia has not been commenced and, in most cases, a certificate of pending litigation has not been filed against title to the lands within 365 days of registration), landowners (among others) may apply to the registrar of the land title office to remove the lien. This process is generally a less expensive and more expeditious way of discharging an expired claim of lien.
- “I will increase my lien later”. Once filed, you cannot increase the amount of a claim of lien. You may file choose to file a new claim of lien and discharge the old one, or file an additional claim for work not claimed under the original claim of lien, but doing so may put you beyond the deadline for filing a valid claim.
- “I filed my lien net of the amounts that I have paid my subcontractors”. A lien claimant should include all amounts incurred in the performance of his contract including amounts that he has paid or must pay to his subcontractors. There is no reason to discount your claim to exclude these amounts and doing so would probably reduce the amount recoverable.
- “I will use money received on this project to pay my trades on another project.” At the risk of oversimplification (again), unless you have paid everyone engaged by you for that project, you cannot use funds earmarked for that project for other purposes. Doing so may constitute a breach of trust under the BLA and expose you to damages, fines and (worst case scenario) imprisonment.
- “If I file a notice of interest, my property cannot be liened.” A “notice of interest” may protect an owner from claims attaching to his interest in the land if he has prior notice of the work, but does not request it. These notices are commonly used in tenant improvement situations. A notice of interest may protect an owner from the sale of the property to satisfy a builders lien. It also may give the owner strong grounds to apply to discharge a claim of lien from title. However, the registration of a notice of interest against title does not preclude lien claims from being filed and they would still be accepted for registration by the land title office.
- “I’m going to remove/damage the work I performed until I’m paid”. Once your work has been incorporated into a project it becomes part of it. You cannot remove your work if it has not been paid for. You may be exposed to liability for trespass in addition to the cost of repairing or replacing your work. The situation is different for material suppliers whose materials have not yet been incorporated into the project. In those circumstances, material suppliers may remove their property but cannot do so to the prejudice of someone who has proven his builders lien in court.
- “I’m an employee owed money by my employer, and I want to lien the project I worked on”. Employees cannot file claims of lien against property for money owed by their employers. The employee is an agent of the employer and for the purposes of the BLA their work is one and the same. If an employee has not been paid by his employer, he should contact Employment Standards, and/or sue for unpaid wages, and not file a claim of lien.
- “I filed my claim of lien, when do I get paid?” Unfortunately, receiving payment may not be that simple. If there is no dispute about the amount owed, getting paid may just be a matter of time. If there is a dispute about the amount owed, or if the debtor has no ability to pay, you may have to commence a court action and see the matter through trial to judgment to get paid. The continued presence of the lien on title to the property may provide strong negotiating leverage, but the mere act of filing the lien does not ensure payment.
The above is intended as general information only. This area of law is very nuanced, and you should contact us if you are uncertain about how to proceed.