A Builders Lien Was Filed on My Home: What BC Homeowners Can Do

You find out about a builders lien on your home when a contractor tells you, when your lender calls, or when your buyer's lawyer finds it on title. Either way, it needs attention before it holds up a sale or refinance.

A lien is security for a disputed payment, not a judgment against you. The Builders Lien Act gives owners several ways to challenge it or move it off title while the dispute is sorted out.

First, find out exactly what was filed

A claim of lien under BC's Builders Lien Act is filed in the land title office against your property. Before you respond, get a current title search from the Land Title and Survey Authority (LTSA) and a copy of the claim of lien. Note four things:

• Who filed it. Was it the contractor you hired, or someone your contractor hired, such as a subcontractor or supplier? The answer changes which removal routes are open to you.
• The amount claimed. Compare it with your contract, your invoices and what you have actually paid.
• The filing date. The one-year deadline to enforce the lien runs from this date.
• The address for service. You will need it if you serve a notice on the claimant.

Our guide to builders liens in BC explains who can file and how the deadlines are set. This article focuses on what you, as the owner, can do once a lien is on your title.

Check whether the lien was filed in time

A claim of lien must be filed within 45 days. If a certificate of completion was issued, the 45 days run from the date it was issued. Otherwise, they run from the date the head contract was completed, abandoned or terminated or, if there was no head contractor, from completion or abandonment of the improvement.

The land title office does not check whether the claimant met that deadline. But a lien not filed within the time the Act allows is extinguished, and the court or the registrar can cancel a claim of lien once it is extinguished. If the work stopped months before the filing date, have the timeline checked.

Make the claimant act: the one-year limit and the 21-day notice

A lien does not sit on title forever. Within one year of filing, the claimant must start a court action to enforce the lien and, unless the lien has already been removed by payment into court or security, register a certificate of pending litigation against your title. If that does not happen, the lien is extinguished. The LTSA says a lien can then be removed from title by filing a Form 17 for a "Claim of Builders Lien by Effluxion of Time".

You do not have to wait a year. As the owner, you can serve the claimant with a notice, in the prescribed form, requiring them to start an action and register a certificate of pending litigation within 21 days. Service can be personal, or by mail or delivery to the address for service in the claim of lien; a mailed notice is deemed served on the eighth day after it is mailed. If the claimant does not act within the 21 days, the lien is extinguished.

The notice forces the issue. It can clear a weak or abandoned claim quickly, but it can also prompt a lawsuit, so think it through before you serve it.

Getting the lien off title now: security or payment into court

When a sale, refinance or construction draw cannot wait for the dispute to end, the Act offers two ways to take the lien off title while the argument continues.

Giving security

You can apply to court to cancel the claim of lien on giving sufficient security for payment of the claim. The court decides what security is satisfactory after considering all relevant circumstances, and it can be less than the amount claimed. Once the order is filed, the registrar cancels the lien and the dispute continues against the security rather than your home.

Paying into court for subcontractor liens

If the lien was filed by someone your contractor hired, rather than by someone you hired, you can apply to pay into court the lesser of the total of those liens and the amount you still owe your contractor. That amount must be at least the holdback you were required to keep on your contract. The payment discharges you from liability for those liens, and the order must provide for their removal from title.

Your holdback is your protection

The Act requires the person primarily liable on each contract to hold back 10% of the greater of the value of the work or material provided and any payment made. On a renovation, that is usually you. The total that everyone claiming under your contractor can recover is capped at the greater of what you still owe your contractor and the holdback you were required to keep.

That is why the holdback matters. An owner who kept it, and owes nothing more, is generally exposed only up to that amount. An owner who paid in full without keeping it can be exposed for the holdback again. And a payment to your contractor after a subcontractor has filed a lien you know about, while it is still on title, does not reduce what you owe to the extent of that lien. Before paying anyone after a lien appears, get advice.

Liens filed against the wrong property, and settling

The court can cancel a claim of lien that does not relate to the land it was filed against, or that is vexatious, frivolous or an abuse of process. A person who files a lien against land it does not attach to is liable for the owner's resulting costs and damages.

If you settle, the lien still has to come off title; the LTSA notes that a lien removed on payment or settlement is cancelled using a Form C. Make sure any payment is made in exchange for a signed discharge that can be registered, and coordinate the timing with your real estate lawyer if a sale or refinance is pending.

The lien is only the security. The claimant's contract claim, and your defences to it, remain. If the dispute is about unfinished or defective work, see our article on what to do when a contractor did not finish the job.

Lien on your title? Act before it holds up your sale or refinance

Our litigation lawyers can review the claim and the timeline, serve a notice to commence an action, apply to cancel the lien or replace it with security, and negotiate a release and discharge.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.