Builders Lien Issues for Design Professionals
12 important questions on Builders Lien Issues for Design Professionals
What is a Lien?
Serves to guarantee an underlying obligation
If obligation is not satisfied, creditor can seize the asset that is the subject of the lien
What is a Holdback?
What is the value of a holdback? When is it not necessary?
- 10% the value of completed work
- Mandatory unless under $100,000 or provincial government
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What is the lien filing period?
What is the holdback release period?
What are the triggering events for filing a lien or holdback release?
- Issuance of certificate of completion of a contract or subcontract
- Completion or abandonment of the improvement
What is the criteria for substantial completion?
- Head contract, contract or subcontract - 3-2-1 percentage of cost to complete formula
- Improvement
- Strata lot - treated separately - conveyance to first purchaser
What are the cornerstones of the builder's lien act?
- The Lien - right that the person has improved the property and has the right to file a claim
- The holdback - reatin 10% on each progress payment for 55 days for unpaid subcontractors if they don't file a lien
- The trust - not the same as holdback - owners pay contractors fund to pay subcontractors - if funds are misappropriated, this is a breach of trust - can pierce corporate veil
What is the process for acquiring substantial completion?
- Within 10 days of request by contractor/subcontractor, determine completion/issue certificate
- Within 7 days of certificate, deliver copy and post notice
What are some of the issues with certification?
- Accuracy and completeness
- Effective as of the date of issuance
What is the design professionals' liability in regards to the builder's lien act?
- Knowledge of the Act
- Client compliance with Act
- Certification of payment, completion and holdback release
What are the liens of a design professional? How does it differ from Builders' lien?
NO HOLDBACK.
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