The Builders’ Lien Act is in place to assist and protect contractors, labourers, and suppliers who have provided work or material to a construction project. The Lien Act comes into play when these contractors, labourers, and suppliers have not been paid. The Builders’ Lien Act is also capable of protecting owners of property by limiting their liability to that of the lien fund in the event a general contractor does not pay its subcontractors and suppliers.
The Builders’ Lien Act is in place to secure a claim for payment of the money owed. It is a charge against the property. Property where work is done or materials are supplied but money is owned comes under the Act, irrespective of the project being a large commercial development or a small home renovation.
Entitlement to a Lien
Registration of a lien can only happen in respect of an “improvement,” and it attaches the lands on which the improvement is located. “Improvement” can mean anything that is constructed, erected, built, placed, dug or drilled, or intended to be constructed, erected, built, placed, dug or drilled, on or in land, except anything that is neither affixed to the land nor intended to be or become part of the land. What it implies is that work happening or materials that were supplied in relation to things that are not permanently attached to a land will not support a lien.
A lien is considered to be in existence since the moment work is started or materials are supplied. However, a lien has an expiration period. A lien expires if it is not registered within the time prescribed by statute. A lien for materials, services or wages can be registered at any time up to 45 days from the date the last materials, services or wages were provided or the contract was abandoned. Failing to do so leads to the expiration of the liens.
Lands that can be Liened
It is important to understand that the definition of “owner” in the Act is not necessarily the same as other legal concepts of ownership. There may be multiple owners for lien purposes – with the consequence that multiple interests can be liened.
Registration of Lien
Liens can be registered at the Land Titles Offices in Edmonton and Calgary, or at various private registry offices. The following information is the minimum required to register a statement of lien:
- Legal name and address of the party (individual or corporation) registering the lien
- Legal description of the land
- Full legal name and address of the “owner” of the interest in land
- Nature of the legal interest against which the lien is claimed
- Description of the work / materials / services
- The full legal name and address of the other contracting party (party who requested the work)
- The date the work was completed or abandoned, or whether work is ongoing
- Total amount claimed due or to become due
- An address for service within Alberta for the lien claimant
Although a builder’s lien can be a very effective tool, the registration of a lien does not guarantee payment or ensure the contractor or supplier will be paid in full. Requirements under the Builders’ Lien Act are very strict. Seeking legal advice is the right thing to do as it will ensure that all the stringent requirements are met so that your rights can be protected. The sooner you opt for legal advice in the process, the better it will be.