Builders Liens #70

By Gerry Neely
B.A. LL.B.

Column #69 which discussed a Builders Lien clause resulted in questions which indicate that there is some confusion as to when liens may be filed and lien holdbacks may be paid out. Those licensees who were surprised to discover that a lien could be filed against property even after title of the property had been transferred from the owner-builder to a purchaser, questioned the period of time during which the purchaser was exposed to this liability.

The claim of lien of a contractor or subcontractor may not be filed later than thirty one days after the contract of the contractor has been substantially completed, abandoned or otherwise ended.

In the case of someone who has supplied material to a project, the lien may not be filed later than thirty one days after the improvement to which the material has been supplied has been substantially completed or abandoned, or the contract for the construction or making of the improvement has been otherwise ended.

A claim of lien of a worker may not be filed later than thirty one days after the last work has been done by the worker, for which the lien is claimed.

A question was raised as well as to the responsibility of an owner of land who allows someone to build or to alter or repair an existing structure on his land. This could apply where the owner has agreed to sell to a purchaser who then employs a contractor to build a home for him before the title is transferred. Alterations or repairs to an existing structure might occur within a shopping mall. In circumstances where the owner is aware that work is being done on his property even though the owner did not contract for that work to be done, the owner has the same liability under the Act as the person who actually requested the work to be done.

This exposes the owner to claims for liens unless the owner has taken advantage of Section 13 of the Act. This Section states that if the owner posts in at least two conspicuous places on the land, or on the work which is being done upon the land, a notice in writing that he will not be responsible for the improvement, then he is not liable for any improvements constructed after the notice was posted. The owner can obtain the same protection by giving actual notice in writing to a person claiming a lien under the Act, that he will not be responsible for the improvements made after notice has been given.

The Builders Lien Act and the cases interpreting it, do not clearly suggest that in every instance, a purchaser from an owner-builder who retains a ten per cent lien holdback will be able to obtain the discharge of all lien claims in excess of the lien holdback. This unsatisfactory state of the law means that you should consider your position if you are involved in a building contract or negotiating the sale of property under construction or recently completed. If you have any doubts as to the vendor's financial strength, then you might wish to consider either asking the purchaser's lawyer to assume the responsibility of approving the offer, or be prepared to have the vendor confirm in writing to the prospective purchaser whether or not payment has been made for the work done to date (with the exception of a lien holdback) and whether a separate lien holdback has been retained by the owner-builder.

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