The Builders’ Lien Act is About More Than Just Liens

Author: Naheed Bardai

This post was written prior to our January 2017 merger, under our previous firm name, MacPherson Leslie & Tyerman LLP.

Many in the construction industry think that the Builders’ Lien Act of Saskatchewan (“the Act”) deals solely with liens.  It does not.  What the Act does is create a number of options and remedies for lien claimants, trades and owners.  In addition to the lien rights, the Act creates trust claims, but it does not stop there.

The Act also includes mechanisms that can be used by owners, general contractors and trades to resolve claims. In particular, the Act contemplates and creates:

  • a mechanism for payment of holdbacks where substantial performance of a subcontract is certified. This is set out in section 45 of the Act;
  • under section 81, where there is a labour and material bond in place, any person whose payment is guaranteed by the bond has a right of action to recover in accordance with the terms of the bond;
  • any person who is a lien claimant or a beneficiary of the trust under the Act may at any time request in writing from the owner information concerning the terms of the contract, the name of the bank, trust or loan corporation where an account is opened for the purpose of retaining the holdback, a statement as to the particulars of credits and payments from the holdback and/or a copy of any labour and material bond that has been posted. In addition, information can be sought from mortgagees and unpaid vendors. These are just some of the instances where information can be obtained using provisions set out in section 82 of the Act; and
  • section 47 allows those higher up in the construction pyramid to pay a subtrade directly upon giving three days written notice to the proper payer. Where the proper payer doesn’t object within that time, the owner, contractor or subcontractor can pay the lien claimant directly and that payment is deemed to be a payment by the owner to the proper payer.

The Act also makes it clear that the purpose of the legislation is to enforce liens at the least expense. Therefore, under section 91 of the Act, the procedure shall, as far as possible be summary in nature having regards to the amounts involved.  In other words, lien disputes can and often are decided by way of summary judgment (this can help avoid the need for lengthy and costly trials, though even summary procedures can be quite expensive).

Lien claimants owners, trades, bonding companies and insurers should all be aware of these options available under the Act.