Help - My Property Has a Builders Lien
One of the most alarming things that can happen to a homeowner is to discover that their property suddenly has a charge registered against the title in the Land Title Office. Once the charge is registered, it is generally there until someone takes action to have it removed. In the meantime, the lien will be a major issue for anyone who wants to buy your property, because they would acquire title encumbered with the builders lien. If your mortgage comes up for renewal, your mortgage company will also probably require the removal of the lien before renewing your mortgage. The same applies if you want to refinance and get a better mortgage rate.
If you are in the middle of constructing a new home, or having large scale renovations performed on your property, you will no doubt have numerous tradespeople involved and consequently are at increased risk of a builders lien if a dispute develops and a contractor or subcontractor alleges that they have not been paid.
During a large project is an especially bad time to end up with a lien registered against your property. Construction mortgages (financing provided for building a new home on a vacant lot, or extensively renovating an existing property) typically carry higher interest rates and have short terms. If you suddenly find yourself facing a lien as your construction mortgage nears its end, or you need another draw, you might have to scramble to arrange a costly private mortgage until the builders lien is removed. As of the date of writing, the going rate for private mortgages in Victoria, BC seems to be around 12% per annum - a significant increase over the cost of a conventional mortgage.
If you end up on the receiving end of a builders lien, there are a number of different options that you can pursue. The follow are general options only, and are not legal advice.
1: Hire a Victoria builders lien lawyer to deal with the builders lien:
It may sound like blatant self promotion to constantly stress the importance of having a lawyer in a builders lien matter, but having good representation can be invaluable. The lien claimant will either be represented by a lawyer, in which case you may be at a disadvantage without counsel, or the lien claimant will be unrepresented, and may make procedural errors that a lawyer can turn to your advantage.
There are a number of steps that a Victoria builders lien lawyer can take to help you deal with a builders lien on your property. The first thing that the lawyer will likely do is review the facts of your case, to determine if there are grounds to attack the validity of the lien and make an application to the Supreme Court of British Columbia to have the lien removed.
If the lien claimant has done everything properly, the lawyer may recommend serving a Notice to Commence an Action on the lien claimant. Under the Builders Lien Act, if this is done, the lien claimant is forced to file a lawsuit within 21 days, or else their lien is invalid and can be struck. If the lien claimant does start an action, your lawyer will need to file a response within the time limits specified in the Supreme Court Civil Rules. While this does not get rid of the lien, it forces the lien claimant to prove their claim, and makes them confront the costs of litigation, which may motivate productive settlement discussions.
A Victoria builders lien lawyer can also be of assistance by helping you pay the money into court, or into a lawyer's trust account to hold until lien claimant's case has been decided in court. By posting security for the amount of the lien, the property owner can usually have the lien removed, while also disputing the lien claimant's claim. If you have the funds to post security for the lien, this can be the best of both worlds because it frees up the title of your property, but still forces the lien claimant to prove that they are entitled to the amount of their claim.
2: Sit back and let the lien remain on the title:
In certain narrow circumstances, it can make sense to let the lien sit and take no further action. If you own your property outright and the lien is not having any adverse impact upon your financing, then you may be able to ignore the lien until you want to sell your property. In the interim, you won't incur any legal costs, and the lien might become invalid if the lien claimant fails to file a notice of civil claim and certificate of pending litigation within the one year time limit. However, if the lien claimant serves you with a notice of civil claim, you cannot ignore it, and must file a response within 21 days. If you fail to do so, the lien claimant might obtain a default judgement against you for the full amount of the lien. If you are considering this option, it is likely still wise to seek legal advice from a builders lien lawyer to determine if the lien will negatively impact your property and therefore needs to be dealt with. Never ignore any documents received from the lien claimant, and provide such documents to your counsel so that they can explain to you the implications of any steps that the lien claimant takes.
3: Pay the lien claimant:
If the matter has reached the point where a builders lien has been filed. you are probably disputing the validity of some or all of the lien claimant’s invoice . However, if the lien is small, it may be cost prohibitive to continue the dispute once a lien has been filed. In some limited circumstances, it may be more cost effective to settle the matter by paying the amount of the claim of lien. This is an option you might wish to pursue with the assistance of a builders lien lawyer, because a lawyer can advise you on the costs and benefits of challenging the lien compared to paying the lien claimant. Most importantly, a lawyer can help to ensure that once you have paid the amount of the lien, the lien is quickly removed from the title of your property.
