A builders’ lien can be an effective tool for those in the construction industry, such as contractors, subcontractors, workers, and material suppliers to secure payment. A lien hinders owners from selling their property and can hold up project financing, providing a lien claimant with significant leverage in payment disputes.
However, there is a very strict time limit for filing a claim of lien. A lien must be filed no later than 45 days after a certificate of completion is issued with respect to a contract or subcontract, or if no such certificate is issued, within 45 days after the head (general) contract has been completed, abandoned, or terminated or the improvement (project) is completed or abandoned. In order to preserve a lien claim, a Supreme Court action must be commenced and a certificate of pending litigation registered against title to the property by the lien claimant no later than one year after the lien was filed.
Because of the significant impacts of a lien, owners will often take steps to immediately clear their title of liens after they are filed or force lien claimants to move their claims along in a timely manner. One way to do this is by providing notice to a lien claimant under the Builders Lien Act requiring them to commence their Supreme Court action and file a certificate of pending litigation within 21 days, rather than the default rule of one year.
A 21-day notice must be served personally on a lien claimant or delivered or mailed to the address for service contained in the lien claim. If sent by mail, the notice is deemed to be served eight days after being deposited with a Canada Post office anywhere in Canada. If the action to enforce the lien claim is not commenced (and a certificate of pending litigation registered) within 21 days of service or delivery of the notice, the lien is extinguished. The recent case of Amplified Electric Inc. v. Husch, 2018 BCSC 969 highlights the importance of knowing how the “21-day notice” process works, both for lien claimants and owners who wish to address unwanted lien claims.
THE FACTS
In December of 2017, Amplified Electric Inc. (“Amplified”), registered a lien claim against the property of homeowners for which it had performed work (the “Owners”). The Owners sent a 21-day notice by registered mail to Amplified, requiring it to commence an action to enforce its lien claim and file the required CPL within 21 days. The notice was sent by registered mail on January 23, 2018 and signed for on January 26, 2018.
On February 16, 2018, 20 days after the notice was sent, Amplified filed its Supreme Court action, but did not register the required certificate of pending litigation (the “CPL”) until February 20, 2018. As a result, the Owners applied to court to cancel Amplified’s lien claim on the basis that the CPL was not registered within the required time limit.
The issue for the Court to decide was whether the CPL was filed in time. This turned on whether the 21-day period started on the day the registered mail was signed for on behalf of Amplified, or on the eighth day after the notice was deposited with Canada Post as deemed under the Builders Lien Act.
THE DECISION
In this case, the Supreme Court agreed with Amplified that the 21-day window for a lien claimant began eight days after the notice was deposited with Canada Post (if sent by mail), even if the notice had actually been received and signed for several days before. Luckily for Amplified, this meant it had filed its CPL in time, complied with the requirements of the Builders Lien Act, and was entitled to keep its lien on title.
LESSONS LEARNED
1. For owners: When serving a lien claimant with a 21-day notice, ensure it is done according to the process set out in the Builders Lien Act. If being sent by mail, this means the notice must be addressed to the address for service indicated in the lien claim and will not be deemed to be received by the lien claimant until eight days after being deposited with Canada Post.
2. For lien claimants: When served with a 21-day notice, make sure to file your certificate of pending litigation and commence your lien action as soon as possible. If the 21-day notice is sent by mail, the court has now clarified the 21-day time period starts from the eighth day after the notice was deposited with Canada Post by the person sending it. It is best practice, however, to not leave this to the last minute, as missing the deadline by even one day will mean losing your lien claim for good.
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This article was written by Andrew D. Delmonico, lawyer, and Stephanie R. Driedger, articled student, who practise in construction law with the law firm of Kuhn LLP. This article is only intended as a guide and cannot cover every situation. If you have any questions or comments about this case or other construction law matters, please contact us at 604.864.8877 (Abbotsford) or 604.684.8668 (Vancouver).
