Co-authored by Nada Ladhani
Builders' liens are an important tool for contractors, subcontractors and suppliers when collecting unpaid invoices on a project. Although a lien does not guarantee payment, it does provide security and mitigate business risk. The lien process is complex with many timelines to be complied with or risk losing the lien. For instance, Section 43 of the Builders' Lien Act requires lien claimants to commence an action and register a Certificate of Lis Pendens ("CLP") within 180 days of registering the lien or the lien ceases to exist. However, in recent years the Court has found exceptions to this requirement given the right set of facts. Will your lien survive a failure to register a CLP in time?
Notice Is Not Enough
In the recent decision of Livello Projects Inc. v Ku, 2018 ABQB 418, the Court considered whether waiver of the CLP requirement was warranted. Livello registered a lien on the Ku property and commenced an action to enforce its lien 178 days later. Livello was within the 180 day timeline and provided the Statement of Claim to the Ku's counsel, but they neglected to file a CLP on title. Once the 180 days had passed, the Kus had the lien discharged. Livello asked the Court to reinstate its lien.
Livello argued that where notice of a lien has already been provided to the homeowner, a CLP should not be necessary, referencing the Court of Appeal decision in TRG Developments Corp v Kee Installations Ltd., 2015 ABCA 187. In TRG, the Court waived the CLP requirement because the landowners initiated their own proceedings to challenge the lien's validity. In challenging the lien, the Court held the requirements under Section 43 were inapplicable.
However, the Court in Livello found that although there may be exceptional cases where the CLP requirement can be waived, those exceptions did not apply to Livello's situation. The Court held that in addition to notice of the lien, active litigation by the landowner is required to warrant a waiver of the CLP requirement. Since the Kus had been silent and took no action to challenge or concede the validity of the lien prior to the 180 day period, the Court declined to reinstate the lien.
How does this affect you?
There are many nuances involved in lien registration and successful prosecution. Strict adherence to the BLA is advisable; however, if you have missed a deadline, such as registering a CLP, your lien may still exist, depending on the facts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.