Canadian Contractor

If you lien a customer “unfairly,” here’s what they can do…

Builders don't hold too many cards against customers who don't want to pay. But they DO hold most of the cards when it comes to liens.

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November 30, 2018 by canadiancontractor

A while back, a home builder’s customer posted here: “Our Builder Unfairly Liened Us.”

What if is a lien IS unfair? Now, before you read this next post, remember than lien legislation in Canada varies by province.

Here is a reply from Finsbury…

Unfortunately there is little you can do to remove a Builders Lien without involving the Supreme Court.

You could try to negotiating a voluntary discharge. If you can’t negotiate a discharge, the Builders Lien Act has a few options that can be used quickly to have a lien discharged. There is the option of paying funds into court which stands in place of the land. This allows the lien to be removed. As you have a direct contract with the builder this may not be an option. Another way to clear title is to post security in the form of either money, a letter of credit, or a lien bond. The amount is dependent on the circumstances of the debt. You do not accept liability for paying out the lien nor does it does mean that they will be paid anything at all. Both are subsequently determined in the legal action to enforce the lien.

You could do nothing. In order to enforce their lien, they must start legal action within one year of filing the lien otherwise it will be extinguished. If there is no urgency to remove the lien off title, you could choose to wait to see if they enforce it. If they don’t, you can have the lien discharged due to the passing of time.

If you can’t wait, you can force them to start the process of proving their lien. The Act allows you to force them to commence legal action to enforce their lien claims by delivering a Notice to Commence an Action within 21 days. If they don’t started it within that time, the lien is extinguished.

Another option is if the lien is vexatious, frivolous, or abusive or is incorrect (i.e., filed against the wrong property). If a lien is clearly invalid, the Act allows you to apply to the court to have the lien cancelled. Emphasis is on you to prove that the lien is defective (i.e., it contains an error in the name of the filing party or the client). However the lien is likely to only be cancelled if it is obvious that it cannot succeed. Unfortunately,y the courts are reluctant to throw out liens unless they are very clearly defective.

This is a very complicated area and you should exercise caution and talk to a lawyer prior to pursuing any avenue stated above.




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