The construction industry is being asked for input regarding proposed changes to the B.C.’s Builders Lien Act.
The act was subjected to a comprehensive review by a volunteer committee of legal experts with the British Columbia Law Institute (BCLI). The committee has come out with 80 suggested improvements.
BCLI is now asking stakeholders to comment on the specific proposals and inviting them to raise additional concerns with the act and its application. Interested parties have until Jan. 15, 2020 to provide feedback. BCLI is a not-for-profit society dedicated to improvement of the law.
“They are tentative in the sense that they are subject to modification and even abandonment in light of what receive and what feedback we get,” said Greg Blue, senior staff lawyer with the institute.
The Builders Lien Act is a primary piece of construction law. It gives contractors, material suppliers, and workers several forms of security for payment for work done or materials supplied to a building site, most notably a lien on the owner’s land. The act also lets building owners limit their exposure to claims by unpaid subcontractors and workers by maintaining a mandatory 10 per cent holdback.
The BCLI review’s recommendations include raising the minimum lien claim amount from $200 to $3,000, revised lien claim forms, better notification for owners when a lien is filed, certainty as to what is lienable work, clarity around when phased projects reach substantial completion, abolishing “Shimco” liens, solidifying when the 45-day countdown begins and more.
One change Blue believes could have a large impact for contractors is the elimination of the 10-day gap between the end of the lien filing period and the end of the holdback period.
“The reason for that 10-day gap, as I understand it, is that it was originally needed for processing at the land title office, because someone could file a claim of lien right up until the last moment of the 45th day, and it wouldn’t appear on a title so you couldn’t search to determine whether it was there for several days after that because it was a processing delay,” explained Blue.
But times have changed. Electronic filing means that processing times in the land title office have shrunk.
“What the land title office tells us is that if someone came in on the 45th day at 3 p.m. in the afternoon and filed a paper claim of lien, their processing times are reduced to the point to where it would appear on the title the next morning as a pending application so you could search for it, so there really isn’t that need for that long delay,” said Blue. “I think that might make the most practical difference to small contractors.”
While some changes could help remove obstacles to the flow of funds down the contract chain, Blue explained that the purpose of the review is restricted to improving the Lien Act and not addressing the broader issue of prompt payment, unlike efforts in other provinces.
“The prompt payment thing sort of grew up in the course of this thing, after it was started,” said Blue. “For Ontario there was a very different process.”
He explained that Ontario appointed special advisors and poured resources into direct consultation.
“Prompt payment was specifically included in their terms of reference and that was because of a private members bill that had been presented in Ontario which really got the ball rolling. The point of departure was different in that respect,” said Blue.
But in B.C. the project began in 2014 to focus on improving the Lien Act and the controversy and agitation for prompt payment arose after that.
Blue explained that while improving the Builders Lien Act will help address some prompt payment issues, it is a subset of a larger issue.
“It’s an issue that probably needs be addressed on a broader front,” said Blue.
BCLI originally initiated its Builders Lien Act Reform Project at the invitation of the Ministry of Attorney General. The society formed a project committee in 2014. However, the project was put on hiatus as the society worked on another major project involving the Employment Standards Act.
“We hope to hear from as broad a range of stakeholders as possible,” said Blue. “It will give us insight into the problems that are actually encountered with the legislation and helps us to figure out whether we have addressed things in an effective way and brings up issues we may not have discerned otherwise.”
Following the consultation, BCLI will reconvene the project committee, review responses, revisit the proposed changes, finalize recommendations and then issue a report.
“The report is published the same way as a consultation paper,” said Blue. “We don’t lobby for our work. We put it out there in the public interest and hope that people, if they think it worthwhile, will advocate for it.”
The consultation paper can be found at www.bcli.org/project/builders-lien-reform-project.