This post was written prior to our January 2017 merger, under our previous firm name, Aikins, MacAulay & Thorvaldson LLP.
While the lien registration procedures and owner hold back requirements are the most widely known – and utilized – of the extraordinary rights and remedies provided to contractors and sub-contractors under The Builders’ Liens Act (“the Act”), they are not the only such rights and remedies.
In addition to those other rights, section 58 of the Act provides that any person entitled to a lien, even if they have not yet filed a lien, has the right to demand information from the owner, the contractor or their agents which will be of assistance in determining, amongst other things, the detailed status of accounts which may indicate whether or not a breach of The Builders’ Liens Act trust provisions has occurred.
Although a demand for information might also include additional requests relating to the status of work being done for the owner’s benefit, an owner is only required to respond to demands for the following:
- To provide a copy of the contract between the owner and the contractor, if it is in writing or, if the contract is not in writing, a statement summarizing the terms of the contract;
- A statement of the state of accounts between the owner and the contractor;
- The name and address of the financial institution at which the hold back account is being maintained and the account number for the hold back account; and
- A statement of the particulars of the credits and payments from the hold back account, including the dates of the credits and payments, the accrued interest and the present balance of the account.
In addition to the above noted information that can be demanded from the owner or contractor, a person entitled to a lien is also entitled to demand that a mortgagee or unpaid vendor of the land provide the terms of the mortgage or agreement for purchase of the land, and a statement showing the amount that has been advanced under the mortgage or the amount that remains owing under the agreement for purchase of the land, as the case may be.
It is important to note that a lien claimant’s right to demand information can be exercised at any time and the owner, contractor, mortgagee or unpaid vendor of land is required to provide a response within a reasonable period of time of receiving the demand. Where a response is not received within a reasonable period of time, the lien claimant making the demand can apply to the court for an order compelling the owner, mortgagee or unpaid vendor to produce the information requested.
Owners, contractors, mortgagees and unpaid vendors of land should note that they are liable for any losses sustained by the person making the demand as a result of any failure to respond to a lawful demand or, where a response has been made, the response contains information which the owner, contractor, mortgagee or unpaid vendor knows is false.
What should an owner, contractor, mortgagee or unpaid vendor of land do when they receive a demand for information pursuant to section 58 of the Act? As each request for information is unique, it is recommended that the request be carefully read to determine whether the demand includes a request for documents in excess of what the Act requires be provided. An owner, contractor, mortgagee or unpaid vendor should be careful to fully respond to the permitted requests, even if they believe that the information is available elsewhere or has already been provided. The Act permits the person responding to the demand to require payment for the reasonable costs of making copies of documents or preparing a statement prior to producing those materials, so there is no excuse for not providing a complete response. When preparing a response to a demand, it is recommended that the response be carefully reviewed and verified in order to ensure its accuracy.
Although it may be an inconvenient disruption to an owner, contractor, mortgagee or unpaid vendor of land’s busy schedule, the obligation to respond to demands for information is an important part of the careful balancing of rights and remedies found in The Builders’ Lien Act and one that should not be ignored.
This article was originally published in Building Connections, Spring 2011 issue.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.
Daryl A. Chicoine is an associate in the Construction Law Practice Group.