What steps are required in a builders lien action?
Step 1 – Check the time limits
Builders liens must be filed within strict time limits in order to be valid. Generally, a lien must be filed within 45 days of the earliest of the following triggering events:
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The certificate of completion for the contract of the lien claimant, or of any contract up the chain from the lien claimant (including the head contract). If certificates of completion are not issued (often the case on small jobs) then this triggering event may not apply.
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The head contract is abandoned or terminated.
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The entire project is completed or abandoned.
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Where the land in question is a strata lot, the strata lot is conveyed.
Lien claimants must beware of multiple triggering events and keep in mind that a lien period will often start to run before completion of the head contract. Although there are some simple cases such as when the lien claimant is still proceeding with work on the project (lien period not likely expired), or when the entire project was finished more than 45 days ago (lien period likely expired), calculation of the time limits for filing a lien can be complicated and lien claimants should seek legal advice to confirm which time limits apply.
Step 2 - Collect relevant information
Before a lien can be filed in British Columbia, the following information is required:
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the legal name of the entity that is owed money and claims the lien;
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the legal name of the entity that owes money to the lien claimant;
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the legal description of the land the lien will be claimed against. If the lien claimant can provide the residential address the lawyer should be able to obtain the legal description of the land. Where multiple properties are involved, or the lien will be claimed against an individual strata lot, this step can become complicated;
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a short description of the work done or material supplied; and
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the amount due, and a statement as to when it was due.
Step 3: File the lien
Once the information in Step 2 is obtained, a lien can be filed against the property. It is important to fill out the lien form properly as errors in filling out the form can result in the lien being invalid. Care must also be taken to file the lien in the correct Land Title Office.
Step 4: Commence a Supreme Court Action to enforce the lien
Filing a lien does not guarantee payment, but may put pressure on the owner to pay and allow the lien claimant to reach a negotiated solution. However, if no negotiated solution is reached the lien claimant has to file a Supreme Court action to enforce the lien. Care must be taken to file the action in the correct Supreme Court registry, and within the applicable time limits.
Step 5: File a certificate of pending litigation
After filing the Supreme Court action to enforce the lien, a certificate of pending litigation must, within the applicable time limits, be filed in the Land Title Office in which the lien was filed.
Step 6: Prosecute the lien action
If the lien claimant cannot reach a negotiated solution with the owner or contractor from whom payment is due, the only option is to proceed with the lien action and prove to a judge that the lien is valid and that payment is due. The lien claimant is required to prove that work or materials were actually delivered to the land the lien was claimed against, and this generally involves proving that the owner or contractor that the lien claimant contracted with breached the contract it had with the lien claimant by not making payment. As for all claims for breach of contract, the defendant(s) may counterclaim (for deficiencies, delay, etc.) and argue that the amount due to the lien claimant should be reduced, or even eliminated, on account of the counterclaim.
Prosecution of a lien claim by proceeding with a Supreme Court action is expensive and in many cases the legal costs will be prohibitive. Simple cases generally settle early on and the total legal costs from information collection to settlement may be only a few thousand dollars. Complicated cases (those were the facts are in dispute, documentation is poor, counterclaims are made, there are arguments as to whether the lien is valid, etc.) may not resolve without a trial and it is common for legal fees for complicated / protracted cases to be in the tens of thousands of dollars.