Abandoning Your Lien

As the economy ebbs and flows, the status of current construction projects may fluctuate and work may stop for 30 days or more at some points. In these circumstances it can be difficult to know whether or not a project will be completed or whether it has been abandoned. This can have a significant effect on when the clock starts (and ends) with respect to filing a builders lien. A recent decision of the BC Court of Appeal provides some guidance on this issue.

FACTS

In McManamna v. Chorus the general contractor was hired to build a carriage house on the shores of Shuswap Lake. The contractor cleared the site and laid a foundation and slab for the building, but work was halted temporarily at the end of November 2005.

The owners of land separated in February 2006 and as the judge said, the contractor was “caught in the cross-fire”. On March 15, 2006, the contractor filed a builders lien against the property.

The owner argued that the project was deemed to be abandoned 30 days after November 30, 2005, and that accordingly, the contractor did not file the lien within the time limit under the Builders Lien Act.

ISSUE

When will a project be considered abandoned for the purposes of the Builders Lien Act?

DECISION

Generally speaking, the Builders Lien Act requires that a lien must be filed no later than 45 days after the earliest of:

  1. The issuance of the relevant certificate of completion,

  2. The head contract is completed, abandoned or terminated (if there is a head contract), or

  3. The improvement is completed or abandoned (if there is no head contract)

The Builders Lien Act says that:

A contract or improvement is deemed to be abandoned on the expiry of a period of 30 days during which no work has been done in connection with the contract or improvement, unless the cause for the cessation of work was and continued to be a strike, lockout, sickness, weather conditions, holidays, a court order, shortage of material or other similar cause.

In interpreting this part of the Builders Lien Act, there are two important aspects to the BC Court of Appeal’s decision.

First, the court held that adverse “weather conditions” is not limited to conditions that make it impossible to work. Rather the court held that:

Adverse weather conditions that do not make work impossible but impede it to the extent of increasing difficulty and cost are a reasonable basis to suspend the work and do not imply abandonment.

Second the court stated that if work stops on a project for more than 30 days, it only gives rise to a presumption that the project has been abandoned which can be rebutted if there is proof that the parties did not intend to abandon the project. In the court’s opinion, this reflected the “practical realities of construction”.

In this case the court found that the reasons no work was done in between November 30, 2005 and January 9, 2006, was because of weather conditions and holidays such that deemed abandonment could not have occurred before February 9, 2006. As the contractor’s lien claim was filed within 45 days after this date, it was filed in time.

LESSON FOR CONTRACTORS

  • If it appears that work is going to stop for more than 30 days, get proof (preferably in writing) that the owner is not abandoning the project. For instance, if you get verbal confirmation from the owner that they will be continuing with the project, send them a quick email or letter that simply says, “Further to our discussion, we understand that you still intend to continue with the project.”

  • Only lien a project if you think it will help you get paid quicker or you are worried about the owner’s financial ability to pay, but when in doubt, lien.

  • If you miss the lien period, you may still have a debt claim and can sue on that. You just do not have a security interest in the land.

This article was written by Ian Moes, a lawyer who practices in construction law at the law firm of Kuhn LLP. This article is only intended as a guide and cannot cover every situation. It is important to get legal advice for specific situations. If you have questions or comments about this case or other construction law matters, please contact us at 604-864-8877.