BCLI issues report on the Builders Lien Act
July 7, 2020
BY Greg Blue
BCLI has issued a new report containing 86 recommendations for reform of the Builders Lien Act.
The Builders Lien Act is a major cornerstone of construction law. It gives contractors, material suppliers, and workers several forms of security for payment for work done or materials supplied to a building site, most notably a lien on the owner’s land. The Act also lets owners limit their exposure to claims by unpaid subcontractors and workers by maintaining a mandatory 10 per cent holdback.
The Report on the Builders Lien Act is the product of a lengthy review of the Act by the BCLI Builders Lien Act Reform Project Committee, which comprised members drawn from the leading ranks of the construction, banking, and insolvency law Bars. The report was preceded by a consultation paper issued in 2019 to get feedback from stakeholders and the general public on proposed reforms of the Act. BCLI undertook the Builders Lien Act Reform Project at the request of the BC Ministry of Attorney General.
The report recommends numerous changes to the Act to simplify the Act and improve its operation. There are recommendations for easier and faster procedures to clear liens from the owner’s title, and to curb the tendency of the Act to cause interruptions in the flow of funds in a building project. It would also be easier to remove claims of lien that have been filed for improper reasons. Other recommendations would make it easier to determine whether a claim of lien has been, or can be, filed within time. They call for a reduction in the number of separate triggers of the start of the 45-day countdown to the end of the lien filing period.
Two alternatives for periodic release of holdbacks at the owner’s option are proposed to prevent the build-up of unnecessarily large, idle holdback funds in multi-year construction projects. Another recommendation would let owners meet the obligation to maintain a holdback by means of a holdback repayment bond or letter of credit instead of a cash fund. The application of the Act in public-private partnerships would be clarified. The report also addresses the problems that can be caused by obligations imposed by the Act clashing with a Requirement to Pay (RTP) issued by CRA.
Many other long-standing problems with the Act are addressed in this newest report by BCLI. Click here to access the Report on the Builders Lien Act.