Table of Contents

Questions and Answers on the Builders Lien Act

Printed copies of Questions And Answers on the New Builders Lien Act are available for purchase by calling Government Publication Services at 1-800-663-6105 or (250) 387-6409. The cost is $13.80 plus shipping and handling. They may also be ordered online through Crown Publications’ electronic bookstore.

 

Table of Contents

 

Sources referred to in this document

 

Chapter 1 – An Introduction to the New Builders Lien Act
1.1 Purpose of Act
1.2 History of Act
1.3 Why a new Act?
1.4 What the Act cannot do

 

Chapter 2 – The Anatomy of a Construction Project
2.1 The pyramid
2.2 The truncated pyramid
2.3 “Engaged by” and “engaged under”
2.4 The flow of money and credit
2.5 Smaller projects

 

Chapter 3 – The Participants – a “Who’s Who”
3.1 Participants
3.2 “Contractors” and “subcontractors”
3.3 “Head contractor”
3.4 Architects and engineers
3.5 Definition of owner
3.6 Construction lender
3.7 Material supplier
3.8 “Worker”

 

Chapter 4 – The Lien
4.1 Liens generally
4.2 Who can claim?
4.3 Who cannot claim?
4.4 A lien for what?
4.5 “Improvement”
4.6 “Work”
4.7 “Material”
4.8 Equipment rental
4.9 “Operator”
4.10 “In relation to an improvement”
4.11 Successors in interest
4.12 What is secured?
4.13 “Price”
4.14 “Wages
4.15 Property affected
4.16 Lien on the improvement
4.17 Lien against holdback
4.18 Lien on money in court
4.19 Lien against insurance proceeds
4.20 Filing by non-contracting owner
4.21 Small claims
4.22 Terminology: “lien holder” and “lien claimant”
4.23 “Class of lien claimants”

 

Chapter 5 – The Holdback
5.1 Holdbacks generally
5.2 “Required holdback” – the general principle
5.3 Multiple holdback vs. single holdback
5.4 Holdback is notional
5.5 Amount of holdback
5.6 Holdback when no progress payment
5.7 “Person primarily liable”
5.8 Holdback by mortgagee
5.9 Contracts where no holdback is required
5.10 Retention period

 

Chapter 6 – Holdbacks by the Owner
6.1 Holdback account
6.2 Account at savings institution
6.3 Administration of account
6.4 Multiple owners
6.5 Multiple accounts
6.6 When holdback account is not required
6.7 Failure of owner to establish account
6.8 Rights in account
6.9 Conflicts over administration of account
6.10 Payment out of account
6.11 Sale during holdback period
6.12 Right to information

 

Chapter 7 – Holdbacks and the Limited Recovery/Liability Principle
7.1 Limited liability and recovery
7.2 Significance of “recovered under this Act”
7.3 “Amount owing”
7.4 Counterclaim
7.5 “Bad faith”
7.6 Payment after lien filed

 

Chapter 8 – Filing Liens
8.1 Significance of filing
8.2 When lien takes effect
8.3 Form 5
8.4 Who completes Form 5?
8.5 Identifying the claimant
8.6 Description of land
8.7 Multiple parcels
8.8 Description of work or material
8.9 Other description
8.10 Amount of claim
8.11 Failure to file
8.12 Consequences of error

 

Chapter 9 – Clearing Liens From the Owner’s Title
9.1 Background
9.2 Sections 23 and 24
9.3 Who clears the liens?
9.4 Use of section 24
9.5 Use of section 23
9.6 Who pays?
9.7 Amount of payment into court
9.8 When “amount owing” is to be calculated
9.9 “Amount owing” and section 34
9.10 Powers of court
9.11 Clearing further liens
9.12 Section 25

 

Chapter 10 – Certificates of Completion
10.1 Certificates generally
10.2 “Payment certifier”
10.3 Certification by owner and contractor
10.4 Meaning of “completed”
10.5 Form of certficate
10.6 Lien holders affected by certificate
10.7 Notice of certificate
10.8 Form of request
10.9 “Notice of certificate of completion”
10.10 Liability of certifier to lien holder
10.11 Delivery of notice to other persons
10.12 Request for certificate
10.13 Form of request for certification
10.14 Certification by court
10.15 Certificate and early release of holdback
10.16 Other holdbacks
10.17 Impact on “required holdback”

 

Chapter 11 – The Running of Time for the Filing of Liens and Release of Holdbacks
11.1 Time periods generally
11.2 The basic time periods
11.3 Certificate as trigger
11.4 Certificate where time has begun to run
11.5 Other triggering events
11.6 Completion
11.7 Abandonment
11.8 Terminated

 

Chapter 12 – Keeping Money Within the Construction Pyramid
12.1 Keeping money within the pyramid
12.2 Creation of trust
12.3 Relationship to other remedies
12.4 Exceptions
12.5 Duties of trustee
12.6 Uses authorized by the trust
12.7 Section 11(6)
12.8 Consequences of breach of trust
12.9 Bankruptcy of trustee
12.10 Garnishment generally
12.11 Disruptive effect of garnishment
12.12 Limiting the use of garnishment
12.13 “Notice to garnishee”
12.14 Section 12: appropriation of payments
12.15 Assignments

 

Chapter 13 – Enforcing the Lien
13.1 Enforcement generally
13.2 Enforcement by action
13.3 Time limit for enforcement
13.4 Venue for proceedings
13.5 Powers of court
13.6 Evidence of filing and delivery
Chapter 14 – Distributing Proceeds to Lien Claimants
14.1 Distribution policies
14.2 Overview of distribution
14.3 Allocation of sales of proceeds
14.4 Distribution to contractor group
14.5 Distribution to subcontractor group
14.6 Residual operation of trust
14.7 Application of section 10(3)

 

Chapter 15 – Holdbacks by Purchasers
15.1 Liens binding on purchaser’s interest
15.2 Existing improvements
15.3 Purchaser’s holdback
15.4 Agreement as to holdback
15.5 Holdback is permissive
15.6 When purchaser’s holdback unnecessary
15.7 Sale of condominium
15.8 Holdback period
15.9 Limitation of purchaser’s liability

 

Chapter 16 – Deficiencies and Holdbacks
16.1 Deficiencies generally
16.2 Use of “required holdback”
16.3 Additional money retained

 

Chapter 17 – The Construction Lender and Builders Liens
17.1 Position of construction lenders
17.2 Information from lender
17.3 Priorities
17.4 Effect of court order

 

Chapter 18 – Application of the Builders Lien Act to Improvements on Unregistered Land
18.1 Registered and unregistered land
18.2 Applicability of trust
18.3 Does the lien exist?
18.4 Holdback requirement

 

Chapter 19 – Improvements on Mining Property
19.1 Mining property
19.2 Filing against mineral title
19.3 Other provisions

 

Chapter 20 – Public Bodies and the Builders Lien Act
20.1 Governmental bodies
20.2 Local governments
20.3 Provincial government
20.4 “Crown”

 

Chapter 21 – Rights to Information
21.1 Rights to information

 

Chapter 22 – Transition
22.1 Transition generally
22.2 Owner’s holdback account not required
22.3 Other holdbacks
22.4 Purchaser’s holdback
22.5 Money in court
22.6 Application to court
22.7 Regulation making power

 

Appendix A – Builders Lien Act, S.B.C. 1997, Chapter 45 
Appendix B – Forms
Form 1
Form 2
Form 3
Form 4
Form 5
Form 6
Appendix C – Relevant Portions of Miscellaneous Statutes

 

List of Figures
Figure 1 – The pyramid structure of a large construction project
Figure 2 – A “truncated pyramid” structure with owner acting as manager
Figure 3 – Relationships within the pyramid
Figure 4 – The flow of money and credit
Figure 5 – “Classes” of lien claimants
Figure 6 – The multiple holdback scheme
Figure 7 – Limited recovery/liability – section 34
Figure 8 – The obligation to clear liens
Figure 9 – Calculating a payment into court
Figure 10 – Payment into court under section 23
Figure 11 – Clearing additional liens under section 23 decision procedure
Figure 12 – Persons affected by certificate
Figure 13 – Early release of holdback
Figure 14 – The running of time: section 20(3)
Figure 15 – The operation of the statutory trust: section 10
Figure 16 – Garnishment: four cases
Figure 17 – Crediting payments to the right project
Figure 18 – Allocation of proceeds of sale
Figure 19 – Allocation of proceeds of sale: an example
Figure 20 – Distribution to members of the contractor group
Figure 21 – The unfair result of a simple pro rata distribution
Figure 22 – Distribution to members of subcontractor group
Figure 23 – Distribution to members of subcontractor group: example
Figure 24 – Residual operation of the statutory trust example
Figure 25 – Applying section 10(3)

 

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