Under the Builder’s Lien Act of BC, anyone who provides labour and materials for construction of an “improvement” (i.e. A building or other construction project) on land is entitled to place a lien against the land if they are not paid.
This is a powerful tool that can help an unpaid contractor or subcontractor get paid, as it prevents the owner of the land from selling or refinancing the land without dealing with the lien. In addition, construction financing will not advance any more draws to an owner or developer until a lien is dealt with.
However, there are time limits that must be strictly followed in order to have the right to file and enforce a builder’s lien.
The time limit is 45 days from the earlier of a variety of events, these events being:
- Issuance of a certificate of completion with respect to a contract or subcontract. The certificate of completion is a piece of paper in a specified format that notifies other persons that the work under the contract or subcontract is completed. It must be sent to certain individuals and also has to be posted on the job site in a conspicuous place.
- Completion of the head contract or of the improvement if no head contractor is engaged. This means that if there is a general contractor for a project hired by the owner then 45 days from the completion of that contract. If there is no general contractor, then it is 45 days from the completion of the overall construction project. “Completion” is defined under the Builder’s Lien Act as being 97% of the work is done, or even slightly more than that depending on the overall value of the contract. This trigger is very important to keep in mind because on a larger construction project, which trade is involved will greatly change this trigger. For instance, the formwork contractor pouring the foundations may have literally years before the head contract comes to completion. However, the painting contractor may have very little time or the project could even be completed under the definition of the act before they are even done working.
- Abandonment of the head contact or improvement if no head contract. While there is no specific definition of abandonment under the Builder’ s Lien Act, a good example would be where the contractor is not getting paid by the owner and says “I am out of here because I haven’t been paid” and pulls all of their forces of off the project with no intention to return. The head contract or project is deemed to be abandoned under the Builder’s Lien Act if no work is done for 30 days.
- Termination of the head contract. “Termination” is also not defined under the Builder’s Lien Act and generally is determined by looking at the terms of the contract. Usually, the owner would issue written notice of termination setting out the reasons why.
- If the construction project is a strata, then 45 days from when the strata lot is sold to a purchaser. This trigger is designed to protect new strata purchasers from being on the hook related to liens incurred by the developer, after a set amount of time.
As the above shows, the exact 45 day cut off date can be tricky to determine depending on the facts of the situation, so generally it is advisable to contact an experienced Construction Law lawyer like Robert Carter as soon as possible if you think you may want to file a lien claim, so the time limit is not missed.
You should also contact a lawyer even if you think a lien time limit has been missed, as you may still have contract rights and/or a separate lien against holdback money the owner and contractors are obligated to retain, called a “Shimco” lien.