The Builders Lien Act is a powerful tool that gives certain parties rights to register security liens against real property they've worked on, or provided materials to.
This right is not normally available at common law, where the only remedy is a lawsuit.
What is unique about builders liens is the ability to “freeze” land until a debt is paid, or until money is paid “in trust” until the dispute is resolved. This is a powerful tool for contractors or subcontractors who fail to be paid.
To be entitled to a builders lien you have to fall within the definition of:
“ a contractor, subcontractor or worker who, in relation to an improvement, who
- (a) performs or provides work
- (b) supplies material, or
- (c) does a combination of (a) and (b)
has a lien for the price of the work and material to the extent that the price remains unpaid, on all of the following
- (d) the interest of the owner in the improvement
- (e) the improvement itself
- (f) the land in or under which the improvement is located
- (g) the material delivered to the land”
To be able to file a builders lien, there are 2 relevant dates that are crucial, as there are limitation periods in which to file a lien.
If there has been a certificate of completion issued with respect to the contract or subcontract, you have to file a lien NO LATER THAN 45 DAYS after the certificate or completion is issued, or, in the case of a head contract, NO LATER THAT 45 DAYS after the head contract has been completed (or abandoned).
Often those 2 dates are the same, but if there is any doubt, err on the side of caution and get the lien filed. Once the 45-day time period has expired your right to a builders lien is extinguished.
Filing a builders lien is relatively simple. There is a standard form that can be filled out and taken to the Land Title Office for registration. Most law firms can also file builders liens from their computers on line.
The information you will need in order to file a builders lien is the legal description or civic address of the property and the name of the owner. The cost to file a builders lien is relatively inexpensive, about $30.00.
In addition to the lien remedy, the Builders Lien Act also provides for a system of multiple holdbacks if the value of improvements is over $100,000.00.
The owners, contractors and subcontractors have to establish separate holdback accounts of 10% of the value of the work or materials supplied. This is to ensure that funds will be available to workers in the event the owner or head contractor fails to pay.
Once the 45-day period for filing a builders lien has expired, the holdback funds are then released.
Summary
If you don’t get paid for a contract you have performed, or supplied materials for, don’t wait, get a builders lien filed ASAP or as soon as you become concerned that you may not get paid.
Remember, the clock is ticking and you only have a window of 45 days in which to file.
Contact our office for more information or to make an appointment.