Filing a Builders’ Lien in British Columbia
Contracts and payments on construction jobs can become complex webs. Developers hire contractors; contractors hire subcontractors; subcontractors even hire sub-subcontractors. Somewhere along this tangled pyramid, there’s always a chance that someone won’t be paid what they’re owed. Builders’ liens are a means of ensuring that these payments are honored, either partially or wholly.
Presumably many of you reading this will know what a builders’ lien is, but for those that don’t, we’ll start with a brief explanation.
What is a Builders’ Lien?
A builders’ lien is a form of risk management for people in the construction industry. In very simple terms, if you contributed to improving a property — such as working on the land or any sort of construction — you can file a builders’ lien as a means to ensure you get paid at least part of what you’re owed.
Builders’ liens are filed against the owner of the property and are attached to the land title of the property worked on. They do not guarantee full repayment of monies owed, but can help to ensure at least part payment is received.
Who Can File a Builders’ Lien?
People who can file a builders’ lien include:
- Material and equipment suppliers
- Contractors, subcontractors, and sub-subcontractors
For example, a developer hires an architect to design a building. This building includes concrete steps. A concrete supplier is hired by the developer to supply the concrete, and a worker lays and sets it. All three people — the architect, the supplier, and the worker — can file builders’ liens against the property.
Note that it only goes so far down: someone who supplies materials to an architect, a material supplier, or an engineer, cannot file a builders’ lien. They’re not seen to have directly contributed to improving the value of the property.
Where Are Builders’ Liens Filed?
A builders’ lien must be filed in the Land Title Office relevant to the property worked on. You can check yourself to see under whose jurisdiction the property falls under, or you can hire a lawyer.
When Do You File a Builders’ Lien?
A builders’ lien is not a preemptive action. You don’t take out a lien on the off-chance you might not be paid.
Instead, a builders’ lien is typically filed when there is a failure to make payment. If work is still being done and a triggering event has yet to occur (see below) there is no claim to be made. If the work is paid for, there is no reason to file a claim.
What Are the Deadlines?
Submission deadlines for builder’s liens are very strict. Typically, the deadline is 45 days from the start of a triggering event. This deadline cannot be extended, even via the courts. Failure to file by this deadline will result in no claim being made.
There are multiple triggering events which can start the submission period for builder’s liens. Some, or all, of these, may apply to any given job. These triggering events include:
Delivery of the certificate of completion for the contract of the lien claimant. If you receive a certificate of completion, your lien claim period has begun.
Certificate of completion for any contract up to the chain from the lien claimant, including the head contract. Even if you’re a sub-subcontractor and the head contract receives its certificate of completion, the lien claim period has opened for you as well.
Abandonment or termination of the head contract. All subcontractors and sub-subcontractors are now able to file builder’s liens as well.
Abandonment or termination of the project as a whole.
If the property is a strata lot if the strata lot is conveyed.
There will be situations where some of these events will not occur. Smaller construction or renovation jobs, for example, will not always supply certificates of completion. Obviously, this means that a lien submission period cannot be triggered by the delivery of these certificates.
For this reason, and because the deadlines are inflexible, it’s vitally important to know what triggers will and won’t apply ahead of time. It’s entirely possible for a triggering event to occur without someone knowing, so always be aware. The lien should be filed as close to the triggering event as possible to avoid missing the deadline.
In the event a deadline is missed, it’s still possible to file a lien against holdback funds that are yet to be distributed if any.
Do You Need a Lawyer to File a Builders’ Lien?
Strictly speaking, no: a lawyer is not necessary to file a builder’s lien.
However, builders’ liens are very specific legal documents. They must be filled out correctly, or else the claim will be denied. Hiring an attorney who is experienced in filing builder’s liens will ensure your application is correct and your claim is honored.
This article is not to be taken as legal advice. For more information, please contact us by telephone at 604-428-2822 or by email at [email protected]