Why were builders liens invented?

Builders liens are, in essence, a tool for facilitating credit in the construction industry. Because payment in advance for construction work is generally not practical from the owner’s perspective, builders lien legislation gives persons who are not promptly paid for contributing to improvements to land the right to file a lien against the title to the land which restricts the owner’s ability to deal with the land until the lien is removed.

 

Speaking generally, the object of the Mechanics Lien Act is to prevent owners of the land getting the benefit of buildings erected and work done at their instance on their land without paying for them.

(Chaston Construction Corp. v. Henderson Land Holdings (Canada) Ltd., 2002 BCCA 357 at para. 49 citing Hickey v. Stalker (1923), 53 O.L.R. 414 at 415 (C.A.)).

 

Builders lien rights were created because remedies for unpaid creditors in other contexts are not available in the construction context. For example, a bank can foreclose on a house bought on credit (i.e. using a mortgage) if payments are not made, and a vehicle dealership can repossess a vehicle bought on credit, but an excavation contractor cannot un-dig an excavation made for the construction of a basement, a worker cannot take back the hours worked, and a concrete supplier cannot detach concrete from the rebar and repossess the concrete.