Builders Liens

Question 1

48. Once a lien has been filed is there any further action required by the lien claimant?

Answer 1

a. Serve notice of lien, potentially initiate legal action, obtain/enforce judgement if lien claim

Question 2

49. What is the overall purpose of the Builders Lien Act?

Answer 2

a. to provide security for contracts, subs, workers who provide labour/material pretty much this makes sure these guys are paid for their work/material

Question 3

50. Describe two types of liens that can be filed and who can file them.

Answer 3

a. Holdback Lien: is claim against funds that are heldback until a certain condition is met -anyone who is party in construction contract can —> typically contractor, subcontractor
b. Conventional lien: claim against property -can be filed by any person who is owened debt (lender or contractor)

Question 4

51. What is the procedure for the issuance of a “Certificate of Completion”?

Answer 4

a. have payment certifier asses to see if work is completed per the contract and if it s then issue the certfcate
b. within 10 days of request —> must determine if complete and issue certicate within 7 days of issuance you must deliver certficate of completion to all and must post it in prominent place

Question 5

52. As a junior engineer working as the owner’s representative, you may be called upon to function as the “Payment Certifier”. In this role, what liability does the Builders Lien Act expose you to?

Answer 5

a. Person, usually architect or engineer, responsible for determining substantial completion and issuing certificate of completion

Question 6

53. Is there any difference between the holdback maintained by the owner, general contractor, and subcontractors? Explain.

Answer 6

a. The owners holdback must be place ina separate account at a financial institute
b. General contractor can quit the job after 10 days if the owner fails to put 10% holdback in account
c. GC and Subs holdbacks are 10% as well but don’t need account to deposit holdback

Question 7

54. Can an Engineer working for a contractor file a lien on the land (improvement)?

Answer 7

Yes Provided “improvement” construction has begun. Design services are considered as a “contractor” under the Act.

Question 8

55. Prior to the 1997 version of the 8C Builders Lien Act, multi-level holdbacks did not exist. Under the current act, explain how muilt-level holdbacks work and why they were incorporated in the 1997 Act.

Answer 8

a. The act requires owners, contractors and subcontractors to maintain a 10 percent holdback which is intended to increase protection for contractors and subcontractors. Previously they were exposed to the risk of paying twice.
b. Ensures all parties are ensured they are paid for their work and helps to prevent disputes and payment delays

Question 9

56. Why is there no holdback retained from a material supplier?

Answer 9

a. Material suppliers don’t provide labour or service (besides supplying the material) that affects completion of work. There is no one that the contract or subcontract to, for anyone to make a claim against holdback

Question 10

57. On a project of long duration there can be a progressive release of the owner’s holdback. As the owner’s consultant on the project, what challenge does this present to you?

Answer 10

a. A longer duration project requires substantial completion payments so substantial completion dates and tasks need to be determined in contract documents. This usually creates more admin work and would potentially require more claim filings

Question 11

58. How long is the holdback lien filing period? List 3 out of 5 triggers that can start the clock ticking on this period?

Answer 11

a. Certificate of completion of contract
b. Completion of head contract
c. Completion of improvement
d. Abandonment
e. Termination

Question 12

59. With regards to Builders Lien Legislation, as the owner’s consultant on a project you can be held liable for negligence by the contractor as well as by the owner. Describe how each charge of negligence might arise.

Answer 12

a. Assess and issue if contract is complete. Date of issuance triggers running of time for filing of liens and release of holdbacks. 10 days and 7 days. This act creates liability for payment certification failures

Question 13

60. As the owner’s consultant in your capacity as payment certifiers two actions you must take when you issue a Certificate of Completion?

Answer 13

a. Conduct search of title in Land Title Office to see if any claims of liens
b. Conduct Court registry search for liens in action or currently being filed
c. After 7 days must deliver certificate of completion to all and must post it in a prominent place

Question 14

61. Identify the two time periods and their length that apply to managing builders liens.

Answer 14

a. Holdback Lien — 55 days
b. Lien against land — 45 days

Question 15

What is the last day on which Albert can file a claim of lien against the land on which the project is located?

Answer 15

The last day albert can file a claim is on the 45th day after March 15, 2009. The fact that he finished the work earlier is irrelevant.

Question 16

Assume that Albert was the only lien holder to file a claim of lien against the land within the relevant lien filing period. The general contractor is maintaining a holdback from Better Mechanical Contractors Ltd. which is more than enough to pay Albert. On the 56th day after the certificate of completion was issued for Better Mechanical
Contractors Ltd.’s contract, the general contractor pays Albert’s claim of lien out of the holdback. Is the general contractor then free to pay the remainder of the holdback to Better Mechanical Contractors Ltd.?

Answer 16

Not necessarily. One of Better’s suppliers may have started an action to claim a lien against the holdback. The Builders Lien Act creates two distinct rights of lien:
- Conventional (against the land)
- against the holdback.
The contractor will need to check the court registry to determine whether a shimco lien has been claimed before paying out the balance

Question 17

Dewey, Draw and Howe were the consultants to the owner on this project and are designated in the contracts as the payment certifier. Months before the owner ran out of money, the company with the subcontract for the foundations, Claire’s Concrete Inc., wrote and asked for a certificate of completion. The price of the foundations subcontract was $728,000. Dewey, Draw and Howe estimated that the cost to complete the subcontract was $19,000. Dewey, Draw and Howe issued the certificate of completion anyway. Were they wrong to do so?

Answer 17

They were not wrong. A certificate of completion must be issued if the contract or subcontract is substantially completed.