If you are planning a commercial or multi-family development in British Columbia, understanding the builders lien is not optional – it is essential. A builders lien is a legal claim registered against a property title by contractors, subcontractors, workers, or material suppliers who have not been paid for work or materials they provided during construction. In BC, these liens are governed by the Builders Lien Act, and they have real consequences for how projects are financed, how payments flow through the construction chain, and how title transfers are handled. Whether you are an experienced Okanagan developer or approaching your first multi-family project, knowing how liens work protects your investment before a dispute ever arises.
What Is a Builders Lien and Who Can File One?
A builders lien is a statutory charge on a property that gives unpaid parties a legal interest in the land itself as security for amounts owed to them. In BC, anyone who has provided labour, materials, or services that improve a property can file a lien – this includes general contractors, subcontractors, trade workers, equipment suppliers, and material suppliers. Professionals such as architects and engineers may also have lien rights depending on the nature of their engagement.
The lien is registered on the property’s certificate of title at the BC Land Title Office. Once registered, it encumbers the property and can prevent the owner from selling, refinancing, or otherwise transferring title until the lien is discharged. This means a payment dispute between a general contractor and a subtrade can land directly on your property title – a problem that has nothing to do with your own conduct but requires your active involvement to resolve.
Key Deadlines Under the Builders Lien Act
The Builders Lien Act sets strict deadlines for filing, enforcing, and responding to liens. A lien claimant must file within 45 days of completing their work or supplying materials. On projects where a certificate of substantial completion has been posted, the 45-day period runs from the date of that posting. Missing this window extinguishes the lien claim, which is one reason why understanding what substantial completion means on your project matters for all parties involved, not just the contractor.
Once filed, a lien claimant has one year to commence a legal action to enforce the lien, or the lien lapses automatically. An owner who receives a claim of lien must act promptly. The options include disputing the lien, paying the claimed amount into court, or posting a lien bond to clear the title while the dispute is resolved separately. Failing to respond strategically can result in prolonged encumbrances that delay refinancing and complicate project closings.
The 10 Percent Holdback Requirement
One of the most important provisions in the Builders Lien Act is the mandatory holdback. Owners and contractors are required by law to retain 10 percent of the value of work completed under each contract throughout the project. This holdback can only be released after the lien period has expired with no liens filed, or after any filed liens have been discharged by consent, court order, or bonding.
The holdback protects lien claimants lower in the payment chain. If a general contractor is paid in full but fails to pay subcontractors, those subtrades have a claim against the holdback as a fund of last resort. Owners who release holdback early or fail to maintain proper records expose themselves to significant personal liability. Managing holdback correctly requires close coordination between your project management team, your lender, and your legal counsel throughout the construction period.
How Contract Structure Affects Lien Exposure
The type of contract you use on your project directly affects your visibility into the payment chain and your exposure to lien risk. Under a traditional lump sum arrangement, the owner may have limited insight into how funds flow from the general contractor to subtrades. A construction management structure gives the owner greater transparency because the owner engages subtrades directly or through a construction manager who provides full cost reporting – making it easier to confirm that lien holdbacks are being maintained at every tier.
Clear contract documentation is the foundation of lien prevention. Scope definitions, payment milestones, and a documented process for addressing disputes all reduce the likelihood of unpaid claims. Reviewing the general conditions in your construction contract is a practical starting point for understanding where lien risk is most likely to concentrate on your specific project.
What to Do When a Lien Is Filed
When a lien is filed against your property, the first step is to notify your lender and retain legal counsel immediately. Even a disputed or potentially invalid lien can stall financing and create complications with title transfer if left unaddressed. Review the claim carefully: is the work or material in question actually unpaid? Is the amount claimed accurate? Was the lien filed within the required 45-day window?
If the claim is legitimate, prompt payment and a consent discharge is almost always faster and less expensive than litigation. If the claim is disputed, posting a lien bond allows construction to proceed and financing to close while the dispute is resolved separately. Lien disputes that proceed to trial are expensive, slow, and damaging to business relationships – which is why experienced project management that prevents payment disputes from escalating is worth far more than the cost of managing litigation after the fact.
How Team Construction Approaches Builders Liens
At Team Construction Management, we structure every project to minimize lien exposure through disciplined contract administration, certified progress draws, and proper holdback management from start to finish. If you are planning a commercial or multi-family development in Kelowna or across the Okanagan, contact us today to discuss how the TEAM Process protects your project and your property title throughout construction.