Registering Builders’ Liens: When Does the Clock Start Ticking?
September 2021 - 3 min read
The Builders’ Lien Act (“BLA”) sets out deadlines for registering builders’ liens. However, determining if a lien has been registered out of time can be tricky. Whether the work performed by a contractor or subcontractor was abandoned, completed, or neither, is not always clear. A common misconception is that the “last day on-site” is indicative. CANA Management Ltd v Condominium Corporation No. 0513341, 2021 ABQB 470 provides some clarification on this.
Relevant Timelines Under the BLA
A lien expires if it is not registered against title to the relevant lands within the time prescribed by the BLA. The deadline for registering a lien is 45 days from the day that the performance of the services is completed or the contract to provide services is abandoned (90 days in the case of work on oil and gas wells or well site improvements). Further, correcting work done improperly or omitted to be done at an earlier date is not included in calculating the time for lien registration. In other words, deficiency work does not extend a lien period.
“Abandonment” Pursuant to the BLA
In this case, CANA was hired as a replacement contractor. Its scope was only to investigate and correct the deficiencies in the work performed by the previous contractor. CANA performed some work, was unpaid, and registered a builders’ lien. The owner condominium corporation argued CANA’s lien was registered out of time and was therefore invalid.
The issue for the Court was whether CANA’s lien was registered on time, which engaged whether its work was “abandoned,” whether some of its work was correcting prior deficiencies, and whether CANA not invoicing for its latest work was indicative of that work not being lienable.
Dealing first with the abandonment issue, the owner’s argument stemmed from a letter CANA wrote partway through its work, advising that it had “completed” its work on two units and was not interested in performing further work because it was unpaid. The owner argued this correspondence constituted abandonment by CANA, triggering its 45-day lien registration deadline as of the date of the letter.
However, the Court concluded that CANA’s correspondence merely stated that it had completed the work for two specific units in the condominium and not the work as a whole. Further, although CANA’s letter noted it was no longer interested in doing additional work, the letter went on to say that it would be resolving a list of concerns at no extra cost. Included in this list of concerns was the removal of some lumber left by the previous contractor.
Correcting a Previous Contractor’s Deficiencies Is Lienable Work
The owner also argued that the removal of this lumber (left by the previous contractor) was correcting a deficiency, such that this work could not extend CANA’s lien period. The Court rejected this argument, noting that this work was part of CANA’s contractual scope. Removing the lumber was not work to correct CANA’s deficiencies. It was to correct a deficiency from the previous contractor, which was what CANA was retained to do. Thus, it was lienable work.
Charging for Services Is Not Indicative of Whether Work Is Lienable
The owner’s next argument was that CANA removing unused lumber had no value, since CANA did not invoice for this work. The Court rejected this argument for three reasons:
- The fact that the work was not invoiced does not mean it had no value. It simply meant it was not worth the overhead for CANA.
- Whether work is invoiced is irrelevant to whether it creates lien rights. As set out in section 6(1) of the BLA, a lien is created when a person "does or causes to be done any work on or in respect of an improvement." There is no mention of invoicing, and a contractor or subcontractor could in theory register a lien before submitting an invoice (despite this being a poor business practice).
- CANA's lien period did not commence until this work was done, as CANA’s overall scope was not complete, and had not been abandoned.
The Triviality of the Work Is Irrelevant to the Validity of a Builder’s Lien
Finally, the Court dealt with the argument that removing the unused lumber was “trivial” work that did not give rise to lien rights. The Court, citing Glenway Supply (Alta) Ltd. v. Knobloch Drywall, reiterated that the triviality of the work "makes no difference so far as the validity of the builder's lien is concerned, provided the materials furnished and the services performed were done in good faith to complete the contract."
The Court concluded that CANA’s lien was registered before abandonment or completion of its work, and thus within the required time. The 45 or 90-day lien period runs from completion or abandonment, not simply from the last day work was done. As such, a contractor whose contract is incomplete and not abandoned need not register a builders’ lien simply because its last date worked is approaching the relevant lien deadline.
If you have any questions regarding builders' liens or other construction questions, contact Anthony Burden in Calgary or Ryan Krushelnitzky in Edmonton.