James Cain, Associate Lawyer
[email protected]
604-519-0660
In the construction industry—whether residential builds or large-scale commercial developments—a common issue arises time and again: work is completed, but payment does not always follow.
When that happens, owners, developers, contractors, subcontractors, and suppliers all arrive at the same question: how do I secure payment? The answer for many may involve filing a Claim of Builders Lien (“Builder’s Lien), under the Builders Lien Act (the “BLA”).
Although most construction professionals have heard of builders’ liens, far fewer understand how they actually work, when they apply, or the risks that come with using them. Given how powerful this remedy can be as an important tool to collect payment, a clear understanding is essential.
In our practice, we regularly advise clients involved in construction disputes where lien rights are central to the strategy. The same questions arise repeatedly: When can a lien be filed? What deadlines apply? What happens after it is registered? And what risks should be considered before taking that step?
What follows are some of the most common questions we hear about how, when, and why a builders’ lien may be used as a tool to secure payment.
Q: What Is a Builders Lien?
First, it is important to understand that a builders’ lien, on its own, does not guarantee payment, but it has proven to be a useful tool in resolving payment on projects.
A builders’ lien is best understood as a form of security for work performed to improve land. Once the right to a lien arises, a claim may be filed in the Land Title Office and registered against the title to the property where the work was carried out. Registering a builders’ lien against title restricts the owner’s ability to deal freely with the property until the lien is addressed. This has two significant implications:
- If the owner intends to sell the property, the lien must first be removed. This is typically accomplished in one of two ways:
- Payment of the lien in full in exchange for a registered discharge; or
- Payment of the lien amount into court as security, also in exchange for a discharge.
- If the owner intends to refinance the property, sell the property or, if a contractor-developer has an imminent construction financing draw on the horizon, the lien must be cleared to proceed – usually by one of the two methods above.
Q: When Does the Right to File a Builders Lien Arise?
When a construction professional provides work, materials, or labour (the “Work”) on a project, they contribute to an “improvement” on the land on which the Work is provided.
While several factors determine whether a lien right exists, entitlement most commonly arises when payment for the Work is not made. In practical terms, once an invoice is issued and remains unpaid, the right to file a builders lien may be triggered. For one reason or another, invoices often go unpaid near the end of construction projects, or at the end of a contractor (or sub-contractors) engagement on the construction project.
In reality, liens are rarely filed as this right arises. Typically, there is a period where parties attempt to resolve payment disputes through follow-up requests and negotiations before taking formal steps. However, one of the most common issues we see is construction professionals waiting too long.
Unfortunately, the right to file a builders’ lien is not indefinite. The BLA imposes strict time limits, and the courts have no authority to extend them. Missing a deadline can permanently extinguish lien rights.
Q: When Does the Right to File a Builders Lien Expire?
Once lien rights arise, they continue until one of four “triggering events” occurs. From the date of the first triggering event, a 45-day clock begins to run.
Understanding and identifying when a triggering event has occurred is paramount to preserving your right to file a builders lien. Although more than one Triggering Event may occur on a construction project, it is the first Triggering Event that occurs that starts the 45 day clock.
Triggering events differ depending on whether there is a “head contract.”
A head contract is generally the agreement between the owner and the primary contractor hired to carry out the project, and is responsible for hiring sib-contractors, suppliers, etc. (the “Head Contract”). In contrast, where no head contract exists, the owner effectively acts as the general contractor and contracts directly with various trades.
If There Is a Head Contract
The 45-day period begins upon one of the following:
- Substantial completion of the Head Contract, typically determined by a statutory formula based on the value of work remaining;
- Termination of the Head Contract, whether by the owner or the main contractor;
- Abandonment of the Head Contract or the project, generally evidenced by 30 consecutive days during which no work is performed; or
- Issuance of a certificate of completion for the Head Contract or for a subcontractor’s work.
If There Is No Head Contract
The 45-day period begins upon:
- Actual substantial completion of the project, meaning the project is ready for use or is being used for its intended purpose;
- Abandonment of the project; or
- Issuance of a certificate of completion for your contract or subcontract.
Upon the occurrence of any one of these triggering events, the 45-day deadline to file a builders’ lien begins. This deadline is strict and unforgiving.
Because lien rights can be lost permanently through delay—or undermined through improper filing—it is essential to assess timing, documentation, and overall strategy before proceeding. Builders’ liens remain one of the most effective tools available to secure payment in the construction industry, but they must be used carefully and correctly.
If you are facing non-payment on a construction project, proactive legal advice can make the difference between preserving your rights and losing them. Contact our team to discuss your situation and ensure your next step is both timely and strategic.