Chapter 1 – An Introduction to the New Builders Lien Act
1.1 | What is the purpose of the Builders Lien Act?
Purpose of Act
Commentary: the basic aim of the Builders Lien Act is to enhance the financial integrity of relationships within the construction industry. It employs three different strategies.
First, the Act provides a form of statutory security for the payment of money owed to persons such as contractors, subcontractors, workers and material suppliers who add value to a building that is under construction – the “lien.”
Second, the Act provides for the retention of certain funds to create a pool of money out of which claims may be paid – the “holdback.”
Third, it contains measures to ensure that money intended to finance construction is in fact used for that purpose – the “trust.”
1.2 | Is builders lien legislation something new?
History of Act
Commentary: no. Legislation of this kind has existed in British Columbia since 1879. Over the years, it has been revised on numerous occasions to enhance its operation. The new version of the Builders Lien Act was enacted in 1997.
1.3 | Why did we need a new Builders Lien Act?
Why a new Act?
Commentary: legislation of this kind operates against the background of industry practice that is constantly evolving and changing. For that reason, it must be kept under continuous review. A number of provisions of the former legislation had ceased to operate satisfactorily and it was necessary to find ways of modernizing the Builders Lien Act.
The 1997 Act is the final stage of a process of law reform that started over 25 years earlier and included work carried out by the British Columbia Law Reform Commission and a Select Committee of the Provincial Legislature. It was preceded by two Bills introduced into the Legislature for exposure purposes and reflects extensive consultation carried out with the construction industry.
1.4 | Does the Act fully protect people in the construction industry?
What the Act cannot do
Commentary: no. Rights under the Builders Lien Act do not guarantee participants in the construction industry full recovery of the amounts owed to them. Recovery is frequently just a fraction of the amount actually owing. Rights under the Act are no substitute for careful credit granting practices.