Overview Of The Builders Lien Act

The purpose of the Builders Lien Act is to enhance the financial integrity of relationships within the construction industry. It employs three different strategies.

First, the Act provides a form of statutory security for the payment of money owed to persons such as contractors, subcontractors, workers and material suppliers who add value to a building that is under construction—the lien.

Second, the Act provides for the retention of certain funds to create a pool of money out of which claims may be paid—the holdback.

Third, it contains measures to ensure that money intended to finance construction is in fact used for that purpose—the trust.

GENERAL EFFECT ON LAND TITLE PRACTICE

The sections of the Act included in this chapter relate to the filing and enforcement of builders liens. Other sections relating to holdbacks, trust funds, the allocation of proceeds from sale, the distribution of funds among claimants, and rights to information have not been included. Reference should accordingly be made to a complete copy of the Act when dealing with any builders lien issue.

Significant Features of the Act

Some of the more significant features of the Act’s provisions that affect land title practice include the following:

• Architects and engineers (but not persons engaged by them) are entitled to a lien for services provided in relation to an improvement regardless of whether their services are provided before or after the construction of an improvement has begun (s. 1(1), “services”, “work”, and “contractor”).
• Anything that may be done under the Act by or with reference to an owner, contractor, subcontractor, worker, or mortgagee is valid if done by or with reference to an agent of that person (s. 1(6)).
• A notice of interest may be filed in the prescribed form in the land title office by an owner in order to protect the owner from liens claimed in respect of unauthorized improvements (s. 3 and Form 1).
• An agent may file a single claim of lien with respect to a particular improvement on behalf of multiple lien claimants (s. 15(2)).
• A lien may, in limited circumstances, be filed against several parcels of land for the price of all work and material provided to all of the parcels (s. 16).
• The time for filing a claim of lien is uniform for all categories of lien claimants and is 45 days from the issuance of a certificate of completion. If no certificate of completion has been issued, then the running of time is triggered by the completion, abandonment, or termination of the head contract (if any), or the completion or abandonment of the improvement. The issuance of a certificate of completion will not extend the time for filing if time has already begun to run on account of one of the latter circumstances (s. 20).
• The parties entitled to apply for cancellation of a lien upon payment of the claim or sufficient security include contractors, subcontractors, and other specified parties in addition to owners (ss. 23 and 24).
• A contractor, subcontractor, or lien claimant, in addition to an owner, may apply for cancellation of a lien on other grounds. Applications may be made without notice to any other person (s. 25).
• A mortgagee may apply to the court for an order that one or more further advances under the mortgage are to have priority over claims of liens that have already been filed so that the advances can be applied to complete an improvement and increase the value of the land and improvement (s. 32).
• A lien claimant who has commenced an action, in addition to an owner, may serve a notice to commence an action on another lien claimant to require that claimant to enforce their claim of lien and register a certificate of pending litigation within 21 days after service (s. 33).
• The Act imposes liabilities for the wrongful filing of liens (ss. 19 and 45).

Relevant Provisions under Land Title Act

The following sections of the Land Title Act relate to builders liens:

• s. 23(2)(g) indefeasible title subject to claim of builders lien
• s. 30(1) unregistered interests affecting registered owner of charge
• s. 207 postponement of charges
• s. 260(2) exemption from registration of transmission requirements
• s. 261 registration of conveyance made under Builders Lien Act

Relationship of Builders Lien Act to Other Acts

Strata Property Act

See the Strata Property Act, Part 5, Division 5, Builders Liens and Other Charges, ss. 86 to 90 in chapter 57 (Strata Property Act, S.B.C. 1998, c. 43). Section 86 provides that, except as provided in ss. 87 to 90, the Builders Lien Act applies to land in a strata plan.

Certificate of lien under Strata Property Act. See s. 116(4) and (5) of the Strata Property Act in chapter 57 (Strata Property Act, S.B.C. 1998, c. 43), which provides:

Certificate of Lien

• 116 (4) On registration the certificate creates a lien against the owner’s strata lot in favour of the strata corporation for the amount owing.
• (5) The strata corporation’s lien ranks in priority to every other lien or registered charge except

• (a) to the extent that the strata corporation’s lien is for a strata lot’s share of a judgment against the strata corporation,
• (b) if the other lien or charge is in favour of the Crown and is not a mortgage of land, or
• (c) if the other lien or charge is made under the Builders Lien Act.

Builders liens against strata lots. For the special rules regarding holdbacks and builders liens where strata lots are conveyed by an owner developer to a purchaser, see s. 88 of the Strata Property Act in chapter 57 (Strata Property Act, S.B.C. 1998, c. 43), which provides:

Builders lien after purchase from owner developer

• 88 (1) Despite any other Act or agreement to the contrary, if an owner developer conveys a strata lot to a purchaser, a claim of lien under the Builders Lien Act filed against the strata lot, or against the strata lot’s share in the common property, must be filed before the earlier of

• (a) the date on which the time for filing a claim of lien under the Builders Lien Act expires, and
• (b) the date which is 45 days after the date the strata lot is conveyed to the purchaser.

• (2) Despite any other Act or agreement to the contrary, a purchaser of a strata lot from an owner developer must retain a holdback of an amount set out in the regulations until the earlier of

• (a) the date on which the time for filing a claim of lien under the Builders Lien Act expires, and
• (b) the date which is 55 days after the date the strata lot is conveyed to the purchaser.

• (3) The holdback is subject to a lien under the Builders Lien Act.
• (4) The purchaser must release the holdback to the owner developer at the end of the holdback period provided for in subsection (2) unless in the meantime a claim of lien has been filed, or proceedings have been commenced, to enforce a lien against the holdback.

Section 5.2 of the Strata Property Regulation, B.C. Reg. 43/2000, prescribes that, for the purposes of s. 88(2) of the Strata Property Act, the amount of the holdback is 7%. Regulations under the Strata Property Act are included at chapter 58 (Strata Property Regulations).

Builders liens against strata lots in phased strata plans. See s. 87 of the Strata Property Act, which provides:

Builders liens against strata lots in phased strata plans

• 87 Despite any other enactment, in a phased strata plan a claim of lien under the Builders Lien Act may be filed against only the strata lots in the phase in which the materials were supplied or the work was done.

Court Order Enforcement Act—Judgments

An applicant may not apply to register a judgment against a registered claim of builders lien. See the definition of “land” in s. 81 of the Court Order Enforcement Act, R.S.B.C. 1996, c. 78, which “does not include the rights of a lien claimant under the Builders Lien Act”. The definitions in s. 81 apply to s. 86 of the Court Order Enforcement Act, under which an applicant registers a judgment against land. See the discussion of the Court Order Enforcement Act at chapter 37 (Court Order Enforcement Act, R.S.B.C. 1996, c. 78).

Expropriation Act—Orders or Notices

After the filing of an expropriation order or notice under the Expropriation Act, R.S.B.C. 1996, c. 125, the registrar may register “a builder’s lien or other instrument the application for registration of which was made before the order or notice was filed” (s. 7(2)(a)(vi) of the Expropriation Act). See the discussion of the Expropriation Act at chapter 40 (Expropriation Act, R.S.B.C. 1996, c. 125).

Hydro and Power Authority Act

The Builders Lien Act does not apply to the British Columbia Hydro and Power Authority under s. 32 of the Hydro and Power Authority Act, R.S.B.C. 1996, c. 212. If the registrar has incorrectly placed a claim of builders lien on a title held by British Columbia Hydro, the registrar removes it by correction and then gives notice to the lien claimant.

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

Secondary Sources

See the following materials regarding the interpretation and application of the Act:

• British Columbia Builders Liens Practice Manual (CLEBC, 1999–)
• Garner, Pun, Hirst, and Streu, Annotated British Columbia Builders Lien Act 2007–2008 (CLEBC, 2007)
• Questions and Answers on the New Builders Lien Act (British Columbia Law Institute, 1997)
• Coulson, Guide to Builders’ Liens in British Columbia (Carswell, 1992)