You’ve done the labour—laid the concrete, built the wall framing, made the material deliveries—and now you’re collecting invoices, but payments are not arriving. Whether you’re a subcontractor, supplier, or general contractor, receiving payment should not be a roll of the dice. When you’re forced to wait by an owner who won’t pay or when you’re held up because some higher-up hasn’t released funds, a builder’s lien is one of your most significant pieces of legal leverage. But generating a lien correctly, what deadlines are important, and ensuring that you preserve your right to payment are everything to you as a builder. Here’s what you need to know.
The Builders Lien Act, S.B.C. 1997, c. 45 (the “Act”) is an excellent legal mechanism for contractors and subcontractors to collect on money owed for their materials and labour from landowners and other contractors. However, in order to take advantage of these remedies, contractors and subcontractors must comply with the strict timelines for filing a lien as set out in the Act. If a lien is filed out of time, you are out of luck and even the courts have no discretion to allow you to file the lien out of time. The key rule in the Act in order to enforce your claim of lien is to file the lien within 45 days of a variety of triggering events.
Triggering Events When Filing a Builder’s Lien:
Under the Act, there are four general triggering events (note: there is also a fifth trigger under the Strata Property Act):
- Issuance of a certificate of completion
- Completion of the head contract or improvement
- Abandonment of the head contract or improvement
- Termination of the head contract
Importantly, it is the first of any one of these events that triggers the 45-day timeline for filing a Builder’s Lien.
Issuance of a certificate of completion
A certificate of completion is issued by an individual identified in the contract or subcontract as the payment certifier, generally anyone responsible for payment certification, such as the architect or the owner. What is important for the purposes of the 45-day deadline are the dates the certificate was issued, delivered and posted, which are not necessarily the dates the contract was completed, nor the date the certificate was signed.
Completion of the head contract or improvement
In the absence of a certificate of completion, which is often the case, actual completion of the head contract or improvement will trigger the 45-day deadline. “Completed” means substantial performance and completion determined by the 3%-2%-1% formula based on the cost of work remaining to be done. Thus, the 45-day deadline could be triggered by substantial completion despite a contractor or subcontractor still being on site performing work, such as remedying deficiencies.
Abandonment of the head contract or improvement
Abandonment is defined under the Act as “no work” being “done in connection with the contract or improvement” at “the expiry of a period of 30 days”, provided that “the cause for the cessation of work was and continued to be a strike, lockout, sickness, weather conditions, holidays, a court order, shortage of material or other similar cause”. Importantly, it is abandonment of the head contract as a whole and not some part of the project, such as a trade contract, that will trigger the 45-day deadline.
Termination of the head contract
Termination is not defined under the Act. As such, the head contract might provide some indication as to what constitutes termination. Generally, the law of contracts applies. Importantly, it is termination of the head contract that will trigger the 45-day deadline and not termination of subcontract.
Each of these triggers has its own nuances and if there is uncertainty as to whether or not a triggering event has occurred, it is best to consult a legal professional.
Advantages of Builder’s Lien Claims:
There are many advantages to having a claim of lien verses a debt claim.
1) Ability to Claim Costs: In order to enforce a claim of lien in British Columbia, an action is commenced in Supreme Court, regardless of the amount of the claim of lien. In a normal debt collection, if the amount is under $35,000, the action to collect is required to be commenced in Small Claims Court. In Small Claims, legal costs are generally not recoverable. A Supreme Court action allows the successful party to claim such costs.
2) Ability to Seek a Court Order for Sale of Land: One of the most advantageous reasons to pursue a builder’s lien is the ability to seek a court order for the sale of the land that is subject to the lien in order to enforce the claim. This remedy is not available in the normal debt collection procedure, even if you have a judgment registered on title. In that case, you would have to wait for the owner of the lands to sell the land in order to collect. With an order for sale, a lien holder could collect much sooner.
3) Ability for Court to Declare First Charge Lien: In addition, with a claim of lien under the Act the court can make a declaration that the lien is a first charge against the lands in priority of all other interests of the owner. Again, this remedy is not available in the normal debt collection procedure with a judgment registered on title. In that case, a debt collector would likely be last in the line of priority to collect and might not collect anything at all once all other debts, including mortgages, are paid upon sale of the land. With a first charge against the lands, a lien holder is much more likely to get paid.
Conclusion:
The key taken away for contractors and subcontractors is to invoice for work done as soon as a job is complete and give a clear deadline for payment. In the event you are not paid by the deadline, and within 30 to 40 days of job completion, do not delay in filing a claim of lien against title to the land. This preserves the availability of all remedies under the Act to you for the outstanding amount of your materials and labour.
If you are a contractor or subcontractor who is struggling to receive payment for your materials and/or labour, and need assistance with filing and enforcing a claim of lien, or if you’re a homeowner who believes a lien was filed against your property out of time, contact us at Ambleside Law for a consultation. Understanding your options and getting legal advice early on can help you enforce your rights and take advantage of the available remedies under the Act.
Contact Ron Nairne, to learn more about our Construction Law practice.