Builders’ Liens
September 2nd, 2016 by SNJ
If you’re in the business of construction, providing materials or various services in the construction process, then you need to know the importance of protecting your interests with the legal tool known as “Builders’ Liens”.
The Province of Manitoba is governed by The Builders’ Liens Act, setting out all of the relevant legal requirements permitting you to have a lien filed over the title of a property that you are completing work at or have provided materials to.
Builders’ Liens are supplements to the contracts parties at a property have between themselves permitting them to recover funds that may be owing to them. Whether you’re a general contractor, sub-contractor, or even a sub-sub-contractor, filing a Builders’ Lien notifies the property owner and any potential purchasers or creditors that there are outstanding sums of money due for work or services completed, or materials provided at that property.
A Builders’ Lien will be for the value of the work, services provided or the materials supplied to the property. So, if you’ve provided services or done $1,000.00 worth of work, or supplied $1,000.00 worth of supplies, your lien amount will be for the $1,000.00. However, let’s say your contract was for a $1,000.00 and you have only been paid $500.00 of the agreed to amount, then your lien would be for the $500.00 still owing on the contract.
It is important to note that a lien cannot be filed for an amount less than $300.00, and the Act does not apply to Architects and Engineers who have not been paid their professional fees as they’re not viewed as contractors or sub-contractors. Further, a lien cannot be filed for any work relating to Crown lands or contracts with the Crown for a variety of purposes; the Act will also not permit liens for contracts or work related to contracts entered into by Manitoba Hydro for various purposes, as well. If you have any such contracts, contact a lawyer to find out if your work is or isn’t covered by the Act.
Whether you are a contractor, sub-contractor, or a materials supplier, your ability to file a lien commences the moment work is done or materials have been supplied. The time limit for having your lien registered with the Land Titles Office is 40 days after the substantial performance or abandonment of the contract at the relevant property. Whether or not the contract can be deemed substantially performed requires a consideration of various factors and you should contact a lawyer to determine if you meet the criteria.
In moving ahead with having a lien filed over the concerned property, you will need to provide your contact information, the contact information of the owner of the land the lien is being placed over and the amount of money due or to become due. Your Builders’ Lien will stay on the property owner’s title for a period of two years. If you haven’t been paid the money owing to you within that 2 year timeframe, you will have to start a formal court action against the owing party and the property owner before the 2 years expire. The only exception to the 2 year period is if the property owner files a 30 day notice to have the lien removed at the land titles office, forcing you to start your law suit in that 30 day period. If you fail to do so, your lien will be removed and you lose that protection with your only remedy being to sue the party owing you the money.
The main advantage to the Builders’ Lien is that a property owner is to maintain 7.5% of the total contract amount in a “holdback account” for the benefit of all contractors or materials suppliers in the event something happens along the way preventing the various parties from being paid. Generally, the property owner will pay out the 7.5% to the relevant party or parties, permitting the lien to be removed with the parties owed the money receiving a portion of the money they are due. In some cases, the owing party will voluntarily pay out the remaining amount still owing, but if not, then it will be for you to start a law suit against the owing party for the remainder of the money owed that was not paid from the 7.5% in the holdback account.
If you or your business finds itself in a situation where you think a lien might need to be filed to protect your interests, it will always be a good idea to engage a lawyer to help you along the way. They will be able to compile the required documentation and get the required paper work filed at the Land Titles Office. A lawyer will be able to provide you with more detail about the avenues open to you based upon your individual situation and counsel you on the most cost efficient and time sensitive ways of protecting your interests.
While it may seem difficult to take these steps as most people want to stay clear of conflict, legal tools such as Builders’ Liens have been developed to ensure that your business and the overall economy can run as smoothly and honestly as possible; don’t be shy when it comes to ensuring your own financial security.
Notice: The articles on our website are provided for general information purposes only and should not be relied upon as legal advice or opinion. They reflect the current state of the law as at the date of posting on the website, and are subject to change without notice. If you require legal advice or opinion, we would be pleased to provide you with our assistance on any of the issues raised in these articles.
