Lien Legislation Flashcards
What is lien?
The right of a party to withhold assets belonging to another person who owes the party debt until that debt is paid. It’s like collateral.
Who is entitled to a lien?
Anyone who supplies services or materials to an improvement for an owner, contractor, or subcontractor is entitled to a lien.
What is holdback?
When an owner has to retain 10% of the contract cost for 45 days to give subcontractors time to file a lien if the contractor doesn’t pay them.
The 10% can then be used to pay the subcontractors.
What is basic holdback?
Holdback before substantially performed (10%)
What is finishing holdback?
Holdback for the remainder of the contract from the date of substantial performance to completion.
Are there obligations on when you have to pay the holdback?
No. The act says the owner must may pay it, not when. This obligation is usually covered in the contract.
When is a contract substantially performed?
- When the thing being made is ready for use or is being used for the purposes intended.
- Is capable of completion, or has a defect that can be fixed for no more than
a) 3% of the first $500,000 of the contract price
b) 2% of the next $500,000 of the contract price
c) 1% of the balance of the contract price
Who agrees when it’s performed/certified?
A payment certifier (engineer or arhchitect) OR both the owner and contractor together.
A certificate is signed
Who can lien?
Pretty much anybody that has assisted in any way on the alteration of land.
Can you waive lien rights?
No. Any contract that agrees to waive lien rights is a void contract.
What are the limits of lien?
You can only claim anything supplied before the time of claim.
What is preservation of a lien?
No idea
What are the three different types of mortgages?
- Building mortgage - mortgage taken to finance a construction project.
- Prior mortgage - a mortgage registered before the first lien
- Subsequent mortgage - a mortgage registered after the first lien.
