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British Columbia Builders Liens

This article was written by Michael Dew, a Vancouver lawyer who practices civil litigation. Click here for contact information and further details about Michael’s practice. This article provides only information, not legal advice. If you require legal advice you should consult a lawyer.

 

Builders liens filed under the British Columbia Builders Lien Act can be an effective tool for recovery of unpaid debts owed to contractors and material suppliers. If you require assistance filing or prosecuting a builders lien claim for work done or material supplied in British Columbia consider contacting Michael Dew, a Vancouver lawyer who previously qualified and worked as a structural engineer and now practices civil litigation, including construction law and builders liens.
 
Alternative billing structures may be available:
1.      No recovery no fee option (% fee varies based on likelihood of recovery), or
2.      Fixed fee option:
o       Information collection and demand letter, $200 + taxes.
o       Information collection and filing claim of lien, $300 + taxes, for a simple case.
o       Discharge of lien, $150 + taxes.
 
Contact Michael Dew for assistance with your British Columbia Builders lien.
 
What is a builders lien?
A builders lien is a special right of recovery provided by the Builders Lien Act to persons who provided labour or supplied materials to a construction project in British Columbia. The term “construction project” is used broadly because it is not only labour and material provided for new developments that qualify for builders liens, but liens may be claimed when any land is worked on or building is erected, altered, repaired, or added to. Therefore, contractors or material suppliers who have contributed to any improvement in British Columbia may be able to file builders liens for recovery of at least part payment for the value they added to the improvement. According to the Builders Lien Act, if a person with a valid lien claim is not paid voluntarily, the land on which the improvement occurred may be sold to provide the payment due according to the legislation.
 
Who can file a builders lien?
A wide range of persons, including the following, can claim builders liens in British Columbia:
1.      workers;
2.      material suppliers (including renters of equipment);
3.      contractors, subcontractors, sub-subcontractors; and
4.      engineers and architects.
 
Builders liens do not guarantee full recovery
Although it is often worthwhile to file a lien, merely filing a lien does not guarantee full recovery for work done or material supplied. The Builders Lien Act provides a scheme which ensures at least part payment to all lien claimants, but when an entire project fails lien claimants may receive only a fraction of what they are owed. Therefore, contractors and material suppliers should carefully select who they grant credit to and not rely on lien rights except as a last resort.
 
Filing and perfecting a lien claim
One does not have to be a lawyer to file a lien claim, but because the process of filing and perfecting  liens is technical most lien claimants do hire lawyers to assist them. Briefly stated, to perfect a claim of lien one has to file a lien claim against the property in question in the appropriate land title office, file a certificate of pending litigation, and commence a court action. Each of these steps must be done within specified time limits which vary depending on the circumstances of the case. Further, the land owner or other people involved on the project may file a notice requiring the lien claimant to comply with stricter timelines and failure to comply with those accelerated deadlines may result in dismissal of the lien claim.
 
Landowners will frequently pay out the amount of their maximum liability under the Builders Lien Act in order to clear the property title of all liens, but if that does not occur the lien claimant must proceed with the court action with a view to obtaining a court order to force the sale of the land to recover payment of the lien. However, if the court decides the lien claim is not valid, the claim will be dismissed and the claimant may have to pay the landowner’s costs resulting from the lien and the court case.
 
What owners can do when a lien is filed
A lien being filed against property can be disruptive to owners by restricting their ability to complete transactions involving the land, including interfering with the ability of the owner to obtain further construction financing using the land as security. Fortunately for owners the Builders Lien Act limits owner liability and provides mechanisms to pay money into court in exchange for discharge of liens against the land.
 
Holdbacks and limitations of liability imposed by the Builders Lien Act
In a scheme designed to ensure at least partial recovery to all project participants while also protecting project participants from default by those below them on the contractual chain, the Builders Lien Act requires participants up the contractual chain to hold back 10% of the amount owed to those below them (except that no holdback need be retained from those at the bottom of the contractual chain). The holdback amounts are then available to those lower down the contractual chain if an intermediate party defaults. If the lien claims of those claiming on a single holdback exceed the value of that holdback the lien claimants will unlikely be fully compensated and may have to resort to suing the defaulting intermediate party for breach of contract in order to obtain fuller recovery.
 
Trust remedies
In addition to lien rights and the holdback scheme, the Builders Lien Act establishes trust rules which provide that money received by a project participant for work done is impressed with a trust for the benefit of persons retained by that project participant. Trust funds cannot be used to the personal benefit of the project participant until the amounts owed to trust beneficiaries retained by that project participant have been paid. Project participants who do not abide by the trust rules may be personally liable for breach of trust and this is sometimes a way for lien claimants who achieve incomplete recovery using their lien rights to recover further amounts owed to them.
 
Conclusion
Although not guaranteeing full recovery, builders liens in British Columbia are often a useful remedy for recovering payment for work done or materials supplied. However, due to the complexity of the Builders Lien Act and the importance of filing properly completed documents within the specified timelines, legal advice should be sought when bringing lien claims.  
 
Further reading
Follow the link for explanation of the Steps in a British Columbia Builders Lien Action.
 
Partner Website
For more detailed information about buiilders liens visit our partner site www.builderslienlaw.ca
 

 

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