Whether you are a developer, general contractor, subcontractor, or supplier, everyone shares the same goal: seeing a construction project successfully complete with no issues.
While this may be a shared goal, the reality of construction in BC is that disputes over payment are far from uncommon. With multiple stakeholders, layered payment structures, and demanding project schedules, even the best managed projects can encounter bumps along the way. When payment issues do arise, a builders lien can be one of the most effective tools to protect those who have contributed labour or materials to a project.
In BC, builders liens are governed by the Builders Lien Act (the “Act”), which gives those who supply labour or materials to a project the right to register a legal charge to help secure payment. This is a powerful remedy, however it comes with strings attached. The Act imposes strict rules on timing, notice, and procedure, which can make the lien process highly technical and unforgiving. Missing a deadline or overlooking a seemingly minor procedural requirement can completely unravel an otherwise valid lien claim.
Whether you are filing a lien or defending one, understanding the Act’s key requirements, and perhaps more importantly the common pitfalls, is essential. Knowing the rules before a dispute arises can make all the difference between protecting your rights and losing them. The following are some of the key considerations to be aware of before taking steps to enforce a lien claim.
Failing to Prepare is Preparing to Fail
The groundwork for a strong lien claim is laid long before a payment dispute arises. Maintaining good contract administration is vital on every jobsite – whether its properly following the contract’s payment provisions, issuing timely and accurate invoices, documenting the completed work and remaining scope, or obtaining properly executed change orders in accordance with the contract terms.
Good contract administration like this does more than preserve lien rights and may even prevent payment disputes from arising in the first place. Clear documentation and communication about the work that has been performed, especially any work in addition to the original scope, makes it easier to resolve payment issues before lawyers, liens and litigation enter the picture.
If a payment dispute cannot be avoided, the difference between an organized project file and a paper chase can be significant. A contractor with complete, well-maintained records is positioned to act quickly and confidently. Instead of racing against lien deadlines to piece together the project history, identify unpaid work, and track down missing documents, the evidence is already in place and ready to support the claim.
Timing is Everything
The clock to file a claim of lien starts ticking sooner than many people realize. In BC, a lien generally must be filed within 45 days of the triggering event under the Act. Depending on the circumstances, the applicable trigger may be the issuance of a certificate of completion within your contractual chain, the completion or abandonment of the head contract, or the completion or abandonment of the project itself.
Miss this deadline, even by a single day, and lien rights are generally lost for good. The most common pitfall is misidentifying the applicable triggering event. It is critical to determine which event applies to your specific circumstances and to accurately calculate the corresponding deadline. When in doubt, filing sooner than later is almost always the safest approach.
Building A Strong Foundation
The Act prescribes the forms used throughout the lien process, including Form 5 which is used to file a claim. Although a Form 5 appears relatively straightforward, the information included can significantly impact one’s ability to enforce a claim of lien.
A common misconception is that a claim of lien attaches to the project. In reality, the legal charge attaches directly to the land. That means the Form 5 must accurately identify the property’s parcel identifier (PID) and legal description. Depending on its size and nature, it is possible the project spans multiple parcels and the claim should identify each individual parcel. Failing to include all relevant parcels could limit the effectiveness of the lien.
It’s equally important to identify the right parties. The right to file a lien flows from the person that engaged you to provide labour or materials to the project. That contractual relationship connects the lien claimant to the land and forms the legal basis for their lien rights. Whether you were retained by the owner, general contractor, or another subcontractor likely has some bearing on your lien rights and reinforces the importance of accurately identifying this relationship on the Form 5.
Misidentifying this information can create avoidable disputes or could result in the Form 5 being rejected by the Land Title Office – both of which can lead to unnecessary cost, delay, and potentially jeopardize the lien claim. Before filing, take the time to verify the property details and the parties involved. These may seem like minor administrative details but the Form 5 will be the foundation of your claim and it never hurts to have a strong foundation.
Conclusion
Builders liens are a powerful tool for protecting unpaid labour and materials, but only for those who understand and follow the technical requirements of the Act. Properly documenting the work, following the contract’s payment requirements, obtaining executed change orders, accurately identifying the parties and land on the Form 5, and filing within the required timelines are each important steps a lien claimant can take to protect the value of their contributions to a project.
A well-prepared claim that complies with the Act can be the difference between recovering payment and losing lien rights entirely. This industry knows better than most that cutting corners rarely ends well and a weak foundation has a way of revealing itself sooner or later. The same is true for a builders lien claim and the best results come from getting the details right from the ground up.
Please contact Matthew Carabetta or a member of our Construction + Engineering Group if you have any questions regarding the above.
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