Builders’ Lien FAQ

What is a Builders’ Lien?

A builders’ lien is a legal framework that provides contractors, subcontractors and other parties entitled to payment in a construction project an effective form of recourse if they are not paid within a reasonable time. Registering a lien against a property or leasehold interest secures a legal interest in the property or leasehold interest for the registering party.

Once a builders’ lien has been registered against a property or leasehold interest, various enforcement measures can be utilized by the registering party to try to obtain recovery for their lien claim.  Further, the owner of the property will not be permitted to sell or mortgage the property until the lien is cleared from title, where the lien is registered directly against the property.

Who Can Register a Builders’ Lien in Alberta?

A party entitled to payment for work or supplies relating to a construction project can file a lien, so long as they meet the following requirements:

1. They have done work or caused work to be done based on an “improvement” to the land; or
2. They provided any of the materials used for that “improvement” of the land.

The term “improvement” in this case refers to anything constructed, built, erected, dug, drilled on or in the land in question. Work completed on items not permanenting affixed to the land (e.g. a mobile home) may not provide sufficient grounds to register a lien against the land itself. In certain instances, drawings or specifications created by consultants may support a lien, where those drawings or specifications have been relied on to construct the improvement.

How can a property owner remove a builders’ lien from title?

There are a number of ways to have a builders’ lien removed from title. Two of the most common methods include:

1. Payment of the lien amount or security for the lien amount into court. If the parties cannot agree as to the merits of the claim behind the lien, either the property owner or another party can pay the amount of the lien as security into court while the parties negotiate and/or litigate the matter. Once the funds have been secured, the court will make an order to discharge the lien from title. The funds will remain with the court until the matter has been resolved and then paid out accordingly.
2. If the lien holder fails to observe the necessary deadlines with respect to filing a Statement of Claim or registering a certificate of lis pendens(a notice of pending litigation), the lien may be removed by writing a letter to the Registrar of Land Titles.

Via HMC Lawyers