The Devil is in the Details: A Cautionary Tale about Filing Builders Liens

Contributed by David Classen of Jenkins Marzban Logan LLP

The Builders Lien Act (the “Act”) provides powerful rights for unpaid contractors, subcontractors, and workers to file a claim of lien against the project land for the price of unpaid work and material. In exchange for these rights, the Act requires strict compliance with the prescribed manner, form, and time limits set out in the Act. Failure to comply with any of these requirements will be fatal to the lien claim.

The British Columbia Supreme Court recently emphasized the importance of strict compliance with the Act when filling out the form to file a lien in Omnique Construction Inc. v. Xu, 2017 BCSC 208.  

In this action, the defendant property owners had engaged the plaintiff, Omnique Construction Inc,. to provide forming and framing services. Following the termination of the contract, Ms. Sun, a director and officer of Omnique Construction Inc., attempted to file a builders lien. In filling out the builders lien form, Ms. Sun mistakenly named herself as the lien claimant instead of her company. She had correctly identified the amount owing and that the money was owed to the company and not to herself on the form, but had named herself as the lien claimant. The company subsequently commenced an action against the property owners to enforce the lien and filed a certificate of pending litigation (“CPL”) against the property.

The defendants applied for an order cancelling the claim of lien on the basis that the lien claimant was not identified correctly on the form. Omnique Construction Inc. and Ms. Sun opposed the order on the basis that the error was technical in nature and did not go the substance of the claim. They argued that the defendants were not misled or prejudiced in any way about the debt being claimed against them.  

The British Columbia Supreme Court rejected these arguments, relying on the well-settled law that there is a principle of strict compliance with the requirements of the Act regarding the time and manner in which the claim of lien is filed. The Court found that this principle was not fact-dependent and could not be relaxed to take into account the party’s intention when the claim of lien was filed. In accordance with the Act, the Court cancelled the lien, cancelled the company’s CPL and awarded costs and damages to the defendant property owners.

Omnique Construction v. Xu serves as an important reminder to lien claimants about the consequences of failing to carefully follow the requirements of the Act and, in particular, of incorrectly identifying the lien claimant on the lien form.

Although contractors, subcontractors, and workers are able to file a claim of lien without the assistance of a lawyer, seeking timely and appropriate legal advice can ensure that the strict requirements and timelines of the Act are met and that your lien rights are properly secured.  If you are inexperienced in filing builders liens or have any questions about the requirements of a lien claim, consulting with a lawyer can avoid making costly mistakes. If you do elect to file a claim of lien on your own, it is good practice to ensure you understand the legal distinction between incorporated and unincorporated entities and to consult your corporate records prior to filing a claim of lien to ensure you are naming the lien claimant correctly. 

This article first appeared in the Fall 2017 issue of SICA's Construction Review Magazine. To read the entire magazine click here.

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