The primary purpose of a builder’s lien is to provide protection and recourse for those involved in construction projects. It ensures that individuals and companies involved in the project are compensated for their contributions.
Parties who may file a builder’s lien include contractors, subcontractors, suppliers, and laborers who have provided work, materials, or services on the construction project.
There is a specific time limit within which a builder’s lien must be filed after the work or materials were provided. In British Columbia, this time limit is typically 45 days from the date of the last work performed or materials supplied.
To initiate the lien process, the claimant must file a “Notice of Claim of Lien” with the Land Title Office in British Columbia. This notice must include details of the claim, such as the amount owed, the property involved, and the parties involved.
Once a builder’s lien is registered, it becomes a charge on the property, which means the property cannot be sold or refinanced without dealing with the lien. This can put significant pressure on property owners to resolve the payment dispute.
After the builder’s lien is filed, the parties involved may engage in negotiations, mediation, or legal action to resolve the payment dispute. If the matter is not resolved, the claimant may seek a court order to enforce the lien and potentially force the sale of the property to satisfy the debt.
Builders Liens have a “super priority” in relation to other debts or encumbrances on a property. When a builder’s lien is registered and enforced, it is given priority over most other claims or mortgages on the property. This means that the builder’s lienholder’s claim takes precedence in terms of payment or settlement if the property is sold or if there is a dispute regarding the property’s ownership. While builders liens enjoy super priority, there are certain exceptions and limitations. For example, property taxes, strata liens, and some specific statutory claims may take precedence over a builder’s lien. Also, if there is a pre-existing mortgage on the property that was registered before the builder’s lien, that mortgage may retain its priority, however, subsequent advances may not.
A builder’s lien holder may be considered a secured creditor if they have a valid and properly registered builder’s lien on the debtor’s property, and if the value of the lien is equal to or less than the value of the property. In such cases, the builder’s lien is considered a “secured interest” in the property, and the lien holder has a secured claim.
It’s important to note that builder’s liens can be complex legal matters, and the process may vary depending on the specific circumstances and the nature of the construction project. Parties involved in a potential builder’s lien situation should seek legal advice to understand their rights and obligations under British Columbia’s lien laws. Additionally, the rules and regulations regarding builder’s liens may have been updated or changed since the site was written, so it’s advisable to consult the most recent legal resources or a legal professional for the latest information.
Yes! You can file a builders lien at https://ltsa.ca/professionals/property-professionals/file-claim-of-builders-lien/# without the assistance of a lawyer.
The process of removing a lien is more difficult however. https://help.ltsa.ca/myltsa-enterprise/form-c-release.
A property owner or lien claimant who has commenced an action may serve a lien claimant with a notice to commence an action to enforce a lien and to register in the land titles office a certificate of pending litigation within 21 days after service of the notice.
The notice can either be personally served on the lien claimant or mailed or delivered to the address for service given in the claim of lien.
If served by mail the notice is deemed to have been served on the eighth day after the package was delivered to Canada Post.
If the lien claimant does not commence an action to enforce the claim of lien AND register a certificate of pending litigation within 21 days then the lien is extinguished and cannot be restored.
Lien claimants may miss the notice to commence an action to enforce the claim of lien, either because they do not check their mail or because they do not thoroughly read the notice. Therefore, if you file a builders lien you should use an address that is regularly monitored and act quickly once a notice is received.
It is very difficult for most people to commence an action to enforce a claim of lien and file a certificate of pending litigation without the assistance of a lawyer. It may be difficult to find a lawyer who can perform the required work if you wait too long.
Once the builder’s lien is filed, it creates a secured interest in the property for the claimant. This means that the claimant has a legal right to the property as collateral until the debt is satisfied. As a secured creditor, the claimant’s interest in the property takes precedence over unsecured creditors in the event of a dispute, bankruptcy, or foreclosure. In other words, if the property is sold or foreclosed upon, the secured creditor (the one with the builder’s lien) has a higher priority in receiving payment compared to unsecured creditors.
Normally, a subcontractor will not have a contract with the property owner and, therefore, will not have a claim to sue the owner if they are not paid. The builders lien gives the sub-contractor a way to claim an interest in the property which can be used to recover the amount owing on an unpaid bill.
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There are several ways for a landowner to get rid of a builder lien in BC.
If you are a landlord and you are concerned that your tenant may perform work on your property you can file a Notice of Interest in the BC Land Titles Office, which is a warning to other persons that your interest in the land described in the notice is not bound by a lien claimed in respect of an improvement on the land unless that improvement is undertaken at your express request.
The holdback period expires at the end of 55 days after the certificate of completion is issued or, if there is no certificate of completion, 55 days after the head contract is completed or the head contract is completed, abandoned or terminated if the owner engaged a head contractor. If this does not occur, the holdback period ends 55 days after the improvement is completed or abandoned.
Completed is defined as substantially completed which is when f the work to be done under that contract is capable of completion or correction at a cost of not more than:
a) 3% of the first $500 000 of the contract price,
b) 2% of the next $500 000 of the contract price, and
c) 1% of the balance of the contract price.
This is known as the 3 2 1 holdback rule.
This webpage is not legal advice and should not be treated as a substitute for consulting a lawyer. Builders liens and construction law are complicated and it is easy to make mistakes. Always consult with a lawyer to get advice specific to your situation.