How Does a Builders Lien Get You Paid?
As a contractor you likely work hard to deliver excellent work product to your clients. Sadly, no matter the high quality of your work, there will probably be at least a small number of your invoices that do not get paid on time. Unpaid invoices can happen for many reasons. A client might have unreasonable expectations and refuse to pay your invoices no matter how good your work is. If you’re working for the owner, they might run out of money half way through your work and stop paying you. Alternatively, if you are working as a sub-contractor the general contractor might run out of money to pay the sub-contractors, leaving you in a race with the other sub-contractors all trying to get paid.
If you’re facing an unpaid invoice, filing a builders lien within the time limits set out in the Builders Lien Act can protect your unpaid invoice, and also puts pressure on the property owner to pay.
First of all, in any collection situation, your first priority is determining if there is anything that can be recovered. It is no good getting a legal judgment against an individual or company who owns no assets. This is a particularly big problem for sib-contractors who often contract with a general contractor corporation that might be little more than an empty shell. A builders lien helps avoid such a disaster, because your lien will go on the title of the property that you worked to improve. Banks will be reluctant to loan any money against the property, and you will have priority over other creditors who register against the property after your lien is filed. Having a lien or other security is a huge advantage in a collection matter, because you know that at the end of the day there is an asset available against which you can collect on a legal judgment.
Second, a filed builders lien provides excellent leverage in negotiations. The owner of the property might need to sell or refinance in the near future, and they will almost certainly need to deal with your lien claim before they do. Collections are pragmatic, and money paid now is worth more than money paid later after you incur collection costs. Because of this, most collection matters, including builders liens, resolve before trial. Getting that lien filed immediately will place you in the strongest negotiating position, and puts you far ahead of someone who cannot claim a builders lien and is forced to rely only on a claim for breach of contract.
For all their benefits, builders liens can be tricky. Liens need to be filed within the strict time limits set out in the Builders Lien Act, and it is vital that the lien be in the correct form and accurately drafted. Working with a Victoria BC builders lien lawyer is likely the best way to file your lien, in order to make sure that your lien is properly filed and not vulnerable to attack.
