Extensive Changes to Builders Lien Act Proposed
The British Columbia Law Institute released its “Consultation Paper on the Builders Lien Act” (the “Consultation Paper”).
The Consultation Paper was created by a group of construction and insolvency law practitioners and recommends updates and improvements to the current Builders Lien Act, S.B.C. 1997, c. 45 (the “BLA”) to the Provincial Government.
It makes a number of tentative recommendations that would significantly change builders lien practice in British Columbia.
Some of the significant proposed changes include:
- Increasing the minimum amount for which a claim of lien may be filed from $200 to $3,000;
- Requiring only substantial compliance, not strict compliance, concerning the form of a claim of lien;
- Extending the application of the BLA to apply to tenures under the Petroleum and Natural Gas Act, Coal Act, and Land Act;
- Permitting a claim of lien to be filed against unregistered leasehold interests;
- Expressly stating that “demolition” is lienable work, while expressly stating that extractive operations (such as mining) is unlienable work;
- Requiring the Land Title Office to notify a registered owner of land that a claim of lien has been filed against his title;
- Removing the distinction between projects involving a head contractor and those not involving a head contractor for the purpose of determining whether the 45-day lien filing period has been triggered;
- Eliminating the concept of the “holdback lien” that arose as a consequence of the Court of Appeal’s decision by Shimco Metal Erectors Ltd. v. Design Steel Constructors Ltd., 2003 BCCA 193;
- Shortening the holdback period from 55 days to 45 days to correspond to the expiry of the 45-day lien filing deadline;
- Only requiring the retention of holdbacks relating to payments made or work performed in the preceding 12 months, rather than over the entire duration of a contract;
- Authorizing the court to cancel claims of lien by way of “without notice” application if substitute security equal to the full amount of the claim of lien is provided;
- Providing that an owner is not a necessary party to a builders lien enforcement proceeding where security has been posted, unless the owner posted said security;
- Eliminating the one-year limitation period applicable to trust claims under the BLA such that the basic two-year limitation period prescribed by the Limitation Act, S.B.C. 2012, ch. 13 would apply;
- Strengthening the anti-abuse provisions of the BLA;
- Eliminating the requirement for adherence to the “local venue rule” which requires that lien enforcement proceedings be commenced in the municipality or judicial district where the land it concerns is located, unless the court otherwise orders;
- Expanding the class of those eligible to issue a 21 day notice to include anyone who has provided security for a claim of lien; and
- Reconciling some perceived inconsistencies regarding arbitration and lien enforcement procedures.
The above list is not exhaustive. There are many other significant proposed changes aimed at (a) clarifying difficult interpretative issues which have not been resolved by the courts, and (b) streamlining the statute by eliminating cross-referencing among the BLA and other statutes.
A full list of tentative recommendations appears starting at pg. 189 of the Consultation Paper which is available here: Consultation Paper on the Builders Lien Act