A subcontractor in BC who has not been paid for completed work can file a builders lien against the property, pursue a breach of contract claim, invoke statutory trust fund provisions under the Builders Lien Act, and will soon be able to seek adjudication under BC’s Construction Prompt Payment Act.
BC recognized the severity of construction payment disputes by passing Bill 20 in November 2025, creating mandatory payment timelines for the province’s construction industry for the first time. The Builders Lien Act already provides subcontractors with a security interest in the property where they performed work. Each remedy carries distinct deadlines, costs, and strategic advantages depending on the amount owed and the stage of the project. A BC construction lawyer can evaluate which path recovers payment fastest for your circumstances.
Why General Contractors Withhold Payment from Subcontractors
The construction payment chain moves money from the property owner to the general contractor, and from the general contractor to subcontractors and material suppliers. When any link in this chain stalls, subcontractors bear the financial burden. A general contractor experiencing delayed payment from the owner commonly withholds funds from subcontractors even when the subcontractor’s work is complete and accepted.
Common reasons for non-payment include disputed change orders, alleged deficiencies in workmanship, back-charges for delays the contractor attributes to the subcontractor, retention of holdback beyond the statutory period, and insolvency. Some contractors use “pay-when-paid” or “pay-if-paid” clauses in subcontracts to defer payment until they receive funds from the project owner. BC courts interpret these clauses narrowly, typically treating them as timing mechanisms rather than absolute conditions that extinguish the obligation to pay.
BC Laws That Protect Subcontractor Payment Rights
Three BC statutes provide overlapping protections for unpaid subcontractors: the Builders Lien Act creates a charge against the property, the trust fund provisions impose personal liability on contractors who divert funds, and the Construction Prompt Payment Act will establish mandatory payment timelines with adjudication.
The Builders Lien Act (SBC 1997, c. 45) is the primary legislative protection for unpaid subcontractors. It grants every subcontractor, worker, and material supplier the right to register a lien against the land where they provided work or materials. The lien creates a secured interest that prevents the property from being sold or refinanced until the claim is resolved.
The Act also establishes trust fund provisions under sections 10 and 11. Money received by a contractor on account of a construction contract constitutes a trust fund for the benefit of subcontractors and suppliers who performed work on that project. A contractor who diverts trust funds before paying subcontractors faces criminal prosecution, with penalties including fines up to $10,000 and imprisonment for up to two years.
The Construction Prompt Payment Act (Bill 20, Royal Assent November 27, 2025) adds a third protection layer. Once in force, it will require contractors to pay subcontractors within seven days of receiving payment from the owner, with a maximum 28-day payment cycle from proper invoice submission.
Filing a Builders Lien When a General Contractor Refuses to Pay
Subcontractors in BC must file a builders lien within 45 days of substantial completion of their subcontract, abandonment, or termination of the head contract, by registering a claim of lien against the property title at the Land Title Office.
The 45-day deadline is strict and non-negotiable. Missing this window extinguishes the lien right permanently, regardless of the amount owed. A subcontractor’s deadline runs independently from the general contractor’s timeline, meaning the clock starts when the subcontractor’s own scope of work reaches completion. A detailed guide on filing procedures and lien requirements in BC explains each step of the registration process.
The lien amount must reflect the value of work performed minus payments already received. Overstating the claim exposes the lien claimant to liability for damages caused to the property owner. The lien registration process requires prescribed forms that include a verified statement of the amount owed, a description of work performed, and identification of the property.
After filing, the subcontractor must commence a court action to enforce the lien within one year. A filed lien creates immediate pressure on the property owner, who often holds a contractual right requiring the general contractor to discharge liens filed by its subcontractors. This three-party dynamic frequently accelerates settlement negotiations.
Trust Fund Provisions Under the Builders Lien Act
Sections 10 and 11 of the Builders Lien Act designate all money received by a contractor for a construction project as a statutory trust fund held for the benefit of subcontractors, workers, and material suppliers who contributed to that project.
This designation means a general contractor cannot legally spend project funds on unrelated business expenses, overhead, or other projects until every subcontractor on the relevant project has been paid in full. The trust obligation is personal to the contractor and survives bankruptcy, unlike ordinary contract debts. Understanding how holdback requirements interact with trust provisions is critical for subcontractors assessing their recovery options.
Breach of trust carries criminal consequences. A contractor who appropriates trust funds for unauthorized purposes commits an offence punishable by a fine of up to $10,000, imprisonment for up to two years, or both. Subcontractors can also pursue a civil claim for breach of fiduciary duty, which creates a personal liability that cannot be discharged through the bankruptcy process.
The trust fund remedy is particularly valuable when the property itself has limited equity, making a lien claim less effective as a recovery tool. A breach of trust claim may target the contractor personally, reaching assets beyond the specific construction project where the work was performed.
Breach of Contract Claims for Unpaid Construction Work
A subcontractor with a written or verbal agreement can sue the general contractor for breach of contract in BC courts, recovering the full amount owing plus interest, consequential damages, and legal costs.
The choice of court depends on the amount claimed. BC Provincial Court (Small Claims Division) handles disputes up to $5,000 with simplified procedures. The Civil Resolution Tribunal handles construction claims between $5,001 and $35,000. BC Supreme Court handles claims exceeding $35,000 and provides access to full discovery and trial procedures. A comprehensive overview of contractor breach of contract claims in BC covers the elements required to prove liability and the damages available in each forum.
Importantly, builders lien remedies are only available through the Supreme Court. We have had many subcontractor liens struck out where the amounts were less than $35,000 and the claims were filed in Provincial Court.
Even without a written contract, a subcontractor can establish the existence of an enforceable agreement through purchase orders, emails, text messages, invoices, and conduct on site. BC courts regularly enforce verbal construction agreements when the subcontractor demonstrates the agreed scope, the agreed price, and evidence that the work was actually performed.
Key evidence to preserve includes the original subcontract or purchase order, all change order documentation, progress billing records, payment history, correspondence about the dispute, photographs of completed work, and delivery receipts for materials supplied to the project site.
BC’s Construction Prompt Payment Act
BC’s Construction Prompt Payment Act (Bill 20) establishes a mandatory 28-day payment cycle for construction invoices and creates a rapid adjudication process designed to resolve payment disputes within weeks, not months or years through traditional court litigation.
The BC government announced the legislation in November 2025, making BC one of the last major Canadian provinces to adopt prompt payment rules for the construction sector. The Act received Royal Assent on November 27, 2025, and will take effect after a transition period to allow the industry to prepare for new compliance requirements.
Once in force, the payment chain operates on fixed deadlines: a property owner must pay a proper invoice within 28 days, and the general contractor must then pay each subcontractor within 7 days of receiving that payment. If an owner disputes an invoice, it must issue a written notice of dispute within 14 days, identifying the disputed portion and the specific reasons. The undisputed portion remains payable on the original timeline.
The adjudication mechanism allows subcontractors to refer payment disputes to a qualified adjudicator for a binding interim determination. This process, already established in other Canadian provinces with prompt payment legislation, typically resolves disputes within 20 to 30 business days. The adjudicator’s decision binds both parties pending any subsequent court action or arbitration.
Steps to Recover Payment as an Unpaid Subcontractor
An unpaid subcontractor in BC typically recovers payment through structured escalation: first, they send a formal demand letter, then file a builders lien before the 45-day deadline expires, initiate adjudication or a court claim, and enforce the resulting judgment or lien through court order.
Step 1: Send a written demand. Address the letter to the general contractor’s registered office. State the exact dollar amount owing, reference the subcontract and specific invoice numbers, and set a payment deadline of 7 to 14 days. This letter creates a formal record of the demand and often triggers payment from contractors who are slow rather than unwilling to pay.
Step 2: File the builders lien. Do not wait for the demand letter deadline to expire if the 45-day lien filing window is approaching. Filing a lien preserves your security interest in the property while negotiations continue. The lien and the demand letter can proceed simultaneously.
Step 3: Pursue formal resolution. Once the Prompt Payment Act is in force, refer the dispute to adjudication for a binding determination within weeks. Until then, file a court claim in the appropriate forum based on the dollar amount at stake. The process for suing a contractor in BC varies by court level and claim amount.
Step 4: Investigate trust fund diversion. If the general contractor received payment from the owner but failed to pay subcontractors, this constitutes a potential breach of statutory trust. Report the breach to law enforcement and file a parallel civil trust claim against the contractor personally.
Step 5: Enforce the judgment. A court order or adjudicator’s determination can be enforced through garnishment of bank accounts, seizure of contractor assets, or a court-ordered sale of the liened property. Consulting a lawyer about construction contract dispute resolution strategies ensures you pursue the enforcement mechanism most likely to result in actual collection.
Frequently Asked Questions
Can a subcontractor file a builders lien directly against the property owner?
Yes. Under the BC Builders Lien Act, a subcontractor holds an independent right to file a lien against the property where work was performed, even without a direct contractual relationship with the owner. The lien secures payment from the property’s value regardless of any dispute between the owner and the general contractor. Learn more about builders lien fundamentals and who qualifies as a lien claimant in BC.
What happens if the 45-day lien filing deadline passes?
A subcontractor who misses the 45-day deadline after substantial completion permanently loses the right to file a builders lien. The subcontractor can still pursue breach of contract claims, trust fund claims, and prompt payment adjudication, but loses the secured interest against the property title itself. The 45-day window is the single most critical deadline in BC construction payment disputes.
Does a “pay-when-paid” clause in the subcontract eliminate the general contractor’s payment obligation?
BC courts generally interpret “pay-when-paid” clauses as timing provisions that delay the payment obligation, not absolute conditions that eliminate it. A general contractor cannot rely on non-payment from the property owner as a permanent defence against a subcontractor’s claim. This is particularly true when the contractor has received partial payment or when a reasonable period for owner payment has passed.
When will BC’s prompt payment adjudication process become available?
The Construction Prompt Payment Act (Bill 20) received Royal Assent on November 27, 2025, but the adjudication process will not be available until the provincial government brings the Act into force after a transition period. The BC government has not announced a specific implementation date. Subcontractors currently rely on builders liens, breach of contract claims, and trust fund provisions as their primary payment recovery tools.
