Builders Liens

Question 1

Name 5 triggers for running of time on liens

Answer 1

1. Certificate of Completion
2. Completion of head contract
3. Completion of Improvement
4. Abandonment
5. Termination

Question 2

What is a certificate of completion?

Answer 2

“Completed” in relation to a contract means substantially completed or performed, not totally completed or performed. Uses 3-2-1 formula

Question 3

What is the role of payment certifier?

Answer 3

If acting as payment certifier:
1. Within 10 DAYS of request, must determine if complete and issue certificate of compeletion
2. Within 7 DAYS of issuance, must deliver Certificate to all
3. Within 7 DAYS of issuance, must post Certificate in prominent place on site
4. Must keep track of requests- on going obligation to advise when contract is complete

Question 4

Who is the default Payment Certifier?

Answer 4

Owner and Owner/General Contractor

Question 5

What is the 3-2-1 formula and how does it work?

Answer 5

Contract is “substantially completed” if if it can be completed for NOT MORE THAN:
3% of first $500,000 of contract price
2% of next $500,000 of contract price
1% of remaining balance of contract price

Question 6

What counts as Completion of Head Contract?

Answer 6

Same analysis as when certifying contract. Used 3-2-1 formula

Question 7

What does Completion of Improvement mean?

Answer 7

Improvement is completed if the improvement or a substantial part of it is ready for use or is being used for the purpose intended

Question 8

What does Abandonment mean?

Answer 8

Deemed abandonment of contract or improvement after 30 days of no work, unless work stoppage caused by strike, lockout, sickness, weather, holiday, court order, shortage of material or similar cause

Question 9

What does Termination mean?

Answer 9

-Not defined by the Act
-if positive act of termination, should be clear
-will be assessed on case by case basis whether termination occurred

Question 10

When can holdback be released?

Answer 10

After 55 days if no claims of lien filed and no actions started to claim lien against holdback

Question 11

What is the time limit to start Lien Action? What are the actions involved?

Answer 11

-Lien claimant must start action to enforce lien within 1 year of lien filing
-must also file Certificate of Pending Litigation (CPL) in Land Title Office within 1 year of filing lien
- If they do not, lien extinguishes

Question 12

How does the 21 Day Notice work?

Answer 12

• owner can deliver notice to claimant to commence action and file CPL within 21 days of service notice- if they do not, lien extinguished
• this forces lien claimant to decide in less than 1 year whether it’s worth commencing action
• enables faster resolution of lien claims

Question 13

What does the Builders Lien Act do?

Answer 13

Creates a right of lien against holdbacks which is independent of the right to lien land

Question 14

What is a holdback?

Answer 14

10% of every payment made on contract must be retained as “holdback.” Retained to satisfy valid lien claims against land-protection for owner

Question 15

Which types of land does Builders Lien Act not apply to?

Answer 15

-highways, as defined by the Transportation Act
-certain ferry properties
-any improvement done by or for the Ministry of Forests
-Federal undertakings
-not all land under act treated the same, e.g. mines

Question 16

What are the Types of Owners?

Answer 16

-can be owner of the land, but can also be owners of interest in the land (tenants)
-landlords (and other non-contracting owners) can protect themselves by filing a “notice of interest” on the title to the land
-Federal Crown and Agents of Federal Crown generally exempt from Act
-Provincial Crown, agents of the Provincial Crown, municipalities, school boards, and other provincial public facilities are generally subject to the Act