Construction projects in British Columbia involve multiple parties, including property owners, general contractors, subcontractors, and material suppliers. With so many stakeholders involved, the risk of non-payment is a real concern especially in our new tariff environment which is creating uncertainty of costs. When projects suffer from inflated costs the contractors and sub-contractors are usually the first to suffer. To protect those who provide labor and materials, BC has a legal mechanism known as a Builders Lien—a powerful tool that helps ensure fair payment for work performed on a construction project.
In this blog post, we will explore what a Builders Lien is, why it’s important, and how contractors, subcontractors, and suppliers can use it effectively to secure their rights.
What is a Builders Lien?
A Builders Lien is a legal claim registered against a property by a contractor, subcontractor, or supplier who has not been paid for their work or materials. This lien is governed by the Builders Lien Act of British Columbia, which provides a framework for how and when liens must be filed, as well as how they can be enforced or removed.
When a lien is placed on a property, it can complicate the owner’s ability to sell, refinance, or obtain additional financing for the project. This pressure often encourages property owners to resolve payment disputes promptly as well as secure your claim monetarily when many projects are funded through shell companies.
Why are Builders Liens Important?
- Ensuring Fair Payment for Work and Materials
One of the biggest risks in the construction industry is non-payment. Contractors and subcontractors invest time, labor, and materials into a project with the expectation of getting paid. A Builders Lien provides legal leverage, giving unpaid parties a secured interest in the property and increasing their chances of receiving compensation.
- Legal Protection Against Defaulting Owners or Contractors
If an owner refuses to pay a general contractor, or if a general contractor fails to pay subcontractors and suppliers, those who are owed money have legal recourse through the lien process. Without this protection, smaller contractors and suppliers could suffer significant financial losses.
- Encouraging Responsible Payment Practices
The presence of a Builders Lien system encourages responsible financial practices in the construction industry. Property owners and general contractors are more likely to ensure proper cash flow management and timely payments to avoid liens being filed against their projects.
- Securing a Legal Claim Against the Property
Unlike an unpaid invoice, which is simply a debt owed, a Builders Lien attaches to the property itself. This means that even if the property changes ownership, the lien remains until it is settled. This is a significant advantage over traditional debt collection methods.
How to File a Builders Lien in BC
Filing a Builders Lien in BC involves several key steps. It’s essential to follow the correct procedure to ensure the lien is legally enforceable.
- Identify the Deadline for Filing
- In BC, a Builders Lien must be filed within 45 days of substantial completion, abandonment, or termination of the contract. These deadlines are often confusing and difficult to navigate.
- Missing this deadline means losing the right to file a lien.
- Prepare and Register the Lien
- A Claim of Lien must be prepared and registered in the Land Title Office.
- The lien must include details about the claimant, the amount owed, and the property in question.
- Enforce the Lien if Necessary
- If the dispute remains unresolved, legal action must be commenced within one year of filing the lien.
- If no legal action is taken within this period, the lien expires and becomes unenforceable.
- Removing or Discharging a Lien
- If payment is made, or if the lien is disputed and ruled invalid, it can be removed from the property title.
- Property owners can also apply to have a lien removed by posting security (money or a bond) in court.
Common Mistakes to Avoid When Filing a Builders Lien
Filing a lien can be complex, and mistakes can result in an invalid claim. Here are some common pitfalls to avoid:
- Missing the filing deadline (45 days)
- Incorrect property descriptions in the lien
- Filing against the wrong party (e.g., the general contractor instead of the property owner)
- Not pursuing enforcement within one year
To avoid these mistakes, it’s always a good idea to consult with a construction lawyer who specializes in Builders Liens.
Conclusion: Protecting Your Right to Payment
Builders Liens are an essential tool for anyone working in BC’s construction industry. They provide legal protection against non-payment, encourage responsible financial practices, and give contractors and suppliers a way to secure their earnings. However, proper filing procedures and deadlines must be strictly followed to ensure a lien is valid.
If you are a contractor, subcontractor, or supplier facing a payment dispute, consider speaking with a legal professional to understand your options under BC’s Builders Lien Act.
By using Builders Liens effectively, construction professionals can safeguard their financial interests and ensure they get paid for the hard work they put into every project.
Need Help with a Builders Lien?
If you have questions about filing or enforcing a Builders’ Lien in BC, reach out to Braeden Wiens at LK Law to protect your rights and get the payment you deserve.
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Braeden Wiens Partner | General Litigation Langley |
This article is intended to be an overview of the law and is for informational purposes only. Readers are cautioned that this article does not constitute legal or professional advice and should not be relied on as such. Rather, readers should obtain specific legal advice in relation to the issues they are facing.