Protecting yourself as a builder
Building projects comes with a lot of financial risk. This often includes the owner of a project at the top and contractors, subcontractors and other service providers forming part of the project. This means that much of the work is carried out by different subcontractors who have no direct contract with the owner and as a result, have extraordinarily little security to guarantee payment. Considering this risk, if you are in the business of construction, providing materials or various services in the construction process, then you need to know the importance of protecting your interests with the legal tool known as “Builders’ Liens”.
The Builders’ Liens Act of Manitoba (the “Act”) was created in part to protect persons who are not in a position of having a direct contract with the owner for the value of the work done by them that results in an improvement to the value of land. The Act sets out who is entitled to a lien for security related to the improvement to the value of land and the process by which lien claimants may exercise their rights. Whether you are a general contractor, sub-contractor, or even a sub-sub-contractor, filing a Builders’ Lien notifies the property owner and any potential purchasers or creditors that there are outstanding sums of money due for work or services completed, or materials provided at that property.
To file a lien, you must have:
- Address, legal description, or GPS coordinates of job location.
- Your customer’s name and address.
- Short description of work or materials provided.
- Date last on site or date of last supply
- Total amount owing for project.
Whether you are a contractor, sub-contractor, or a materials supplier, your ability to file a lien commences the moment work is done or materials have been supplied. In Manitoba, the time limit for having your lien registered with the Land Titles Office is 40 days after from the last day on site, date of last supply or date of abandonment. You should contact a Lawyer to determine if you meet the criteria for filling.
Your Builders’ Lien will stay on the property owner’s title for a period of two years. If you have not been paid the money owing to you within that 2-year timeframe, you will have to start a formal court action against the owing party and the property owner before the 2 years expire.
There is an exception to the 2-year period. If the property owner files a 30-day notice to have the lien removed at the land titles office, you will need to start a lawsuit within that 30-day period. If you fail to do so, your lien will be removed, and you lose that protection with your only remedy being to sue the party owing you the money.
Many builders may prefer to stay away from conflict. While this make look like a long or stressful process, legal tools such as Builders’ Liens have been developed to ensure that builders are protected. Do not hesitate to contact a lawyer to discuss your rights and obligations under the Act.