Script 268 gives information only, not legal advice. If you have a legal problem or need legal advice, you should speak to a lawyer. For the name of a lawyer to consult, call Lawyer Referral at 604.687.3221 in the lower mainland or 1.800.663.1919 elsewhere in British Columbia.

What is a builders lien?
A builders lien is a claim for payment for work done on a construction project or materials supplied to it. You can register a lien in the Land Title Office and it becomes a charge against the title to the land or property involved.

Who can file a builders lien?
People and companies can file a lien if they are:

1. workers on a construction project.
2. suppliers of materials (including renters of equipment) used on a project.
3. contractors hired by the landowner to work on the project.
4. subcontractors hired by the contractor or by other subcontractors to work on the project.
5. engineers and architects on the project.

Why file a builders lien?
You would file a builders lien to secure payment for work you did on a construction project or material you supplied to it. Construction projects are like a pyramid, with a developer (usually a landowner) at the top. The landowner may handle the construction personally, or hire a general contractor. The general contractor may hire several subcontractors such as a plumber, electrician, and so on. Those subcontractors may in turn hire workers and material suppliers. Somewhere along the way, somebody, including you if you are one of these people, may not get paid.

The BC Builders Lien Act helps those who have worked on a construction project or supplied material to it, but haven’t been paid. Under this law, they can file a charge against the property to secure payment of the money owed to them.

But a builders lien is not always good security. When a project fails, those who have filed liens frequently receive only a fraction of what they are owed. The right to file a builders lien is no substitute for careful credit-granting practices.

How do you file a lien?
You can file a lien yourself, or you can have a lawyer do it for you. You must fill out Form 5 and file it in the Land Title Office where the land is registered. The form is in the Regulations of the Builders Lien Act. You can find them at www.qp.gov.bc.ca/statreg/reg/B/BuildersLien/1_98.htm. A guide to filling out Form 5 is at www.builderslienlaw.ca. If you don’t have internet access, the regulations should also be available at some public libraries. To file a lien, you need the legal description that identifies the location of the project. A street address is not enough. Information on getting a legal description is available from BC Assessment Authority. Its website is www.bcassessment.bc.ca.

How long do you have to file a lien?
You have to act quickly if you want to file a lien. If you wait too long, you’ll lose your right to do so. Generally, the deadline to file a lien is 45 days after the project is substantially completed, abandoned or ended. But you might have to file sooner. Once a “certificate of completion” is issued for a contract or subcontract, then the deadline is 45 days from the date the certificate was issued. There are also different deadlines for condominium projects and mines and quarries. Because the deadlines are short and can be confusing, it’s good to file your lien well before a deadline.

What do you do after filing a lien?
It depends on the circumstances. Because a builders lien is registered against the land, it can interfere with the landowner’s ability to sell the property or maintain mortgage financing for the project. This alone may encourage the landowner to take steps to “clear” the lien, which may involve paying the claim or providing other security. If this does not occur, you must take the further step of suing to enforce the lien and prove your claim is valid. The lawsuit must be started in a Supreme Court Registry near the property within one year of filing the lien. You must also file a “certificate of pending litigation” against the property in the Land Title Office. If you don’t do both of these things within a year, the lien is no longer valid.

What happens if you prove your claim in court?
If the landowner doesn’t pay the claim, and your case goes to court and you prove the claim is valid, the court will order the property to be sold and the sale proceeds used to pay your claim. But if you can’t prove the claim is valid, the lien will be removed, and you may have to pay the landowner’s costs resulting from the lien and the court case.

Can the landowner – or others on the project – speed things up?
Yes, the landowner, or other people involved in the project, can give you a written notice to speed up the process. If this happens, you’ll have to start your lawsuit and file the certificate of pending litigation within 21 days, instead of the usual year. If you miss this time limit, your lien is removed.

If you win, will you get all the money owed to you?
Not always – whether you get all your money depends on the details of the case. Sometimes, the landowner will pay the general contractor, but the general contractor won’t pay the subcontractors. Because it wouldn’t be fair to make the landowner pay twice, the Builders Lien Act uses a system called the “holdback.”

What is a holdback?
The landowner has to hold back 10% of the contract price until 55 days after the general contract is substantially completed, abandoned, or otherwise ended. If the total project exceeds $100,000, the landowner must pay the 10% holdback into a holdback account at a bank or savings institution, administered jointly by the landowner and the contractor. After the 55 days are up, if no liens have been filed, the landowner can pay out the 10% to the contractor. But if there are liens, the holdback may be used to help pay these liens.

BC has what is called a “multiple” holdback system. So contractors and subcontractors must also hold back 10% from any subcontractors they hire. But no holdback can be kept from workers, material suppliers, architects, or engineers – they are entitled to be paid in full.

What if a contractor or subcontractor does not want to wait to get their 10%?
A person who has finished their part of a project may not want to wait until the whole project is done to get the 10% that was held back from them. The Builders Lien Act allows a holdback to be released 55 days after a certificate of completion is issued for their work. If the architect issues a certificate of completion for their contract or subcontract, the person can get their holdback 55 days after the certificate is issued.

What can a landowner do to remove a lien?
A landowner may not want to pay off the lien if there is a dispute about whether the claim is valid. Or the landowner may not be the person in default: for example, the lien claimant supplied materials to a subcontractor who has not paid for them. In either case, the landowner may not want the property tied up in a long court battle. The Builders Lien Act lets the landowner pay money into court – either the full amount of the lien or a smaller amount linked to the holdback that the owner kept. The lien can then be removed from the property. The money paid into court is held as security for the lien. It pays the lien amount – if the lien is eventually proven.

What about the “trust fund”?
The Builders Lien Act says that all money received by a contractor or subcontractor is a “trust fund”. Contractors or subcontractors must pay for everything they owe for work and materials supplied for the project before they can use the money for anything else. If they don’t, they may be personally liable.

Summary
Builders liens can be very complicated. You should get prompt legal advice if you’re in any doubt about your position.

More information
Check the information on builders liens on the website of the British Columbia Law Institute at www.builderslienlaw.ca.

[updated July 2007]

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