Understanding the Builders Lien Act

The Builders Lien Act protects your right to be paid for work performed on construction projects.

In the construction industry, work is often completed before full payment is received. A general contractor hires subcontractors. Subcontractors purchase materials and hire workers. Everyone does the work in good faith, expecting to be paid when the project is finished. But what happens when payment does not come?

British Columbia’s Builders Lien Act exists to answer that question. It provides legal protection for contractors, subcontractors, workers, and material suppliers who contribute to a construction project. Understanding how it works is not optional for anyone operating a trades business in BC — it is one of the most important pieces of legislation affecting how you get paid and how you protect yourself when you do not.

What the Builders Lien Act Does

The Builders Lien Act gives anyone who provides work or materials to a construction project the right to place a legal claim — called a lien — against the property where the work was performed. If the property owner or general contractor fails to pay, the lien gives the unpaid party a legal interest in the land itself, which can ultimately be enforced through the courts.

This matters because in many construction arrangements, the person doing the work has no direct contract with the property owner. A subcontractor hired by a general contractor has a contract with the general contractor, not the owner. If the general contractor fails to pay, the subcontractor would normally have no recourse against the property. The Builders Lien Act changes that by giving the subcontractor the right to lien the property directly.

Who Can File a Lien

The Act protects a broad range of people involved in construction projects. Contractors, subcontractors, workers, and material suppliers can all file a builders lien if they are not paid for work or materials provided to an improvement on land. The key requirement is that the work or materials must have been provided in connection with an “improvement” — which includes construction, renovation, repair, and demolition of buildings and structures.

The 10% Holdback

One of the most important provisions of the Builders Lien Act is the holdback requirement. Property owners are legally required to hold back 10% of every payment made to the general contractor. The general contractor must similarly hold back 10% of every payment made to subcontractors. Subcontractors must hold back 10% from their subcontractors in turn.

This holdback creates a pool of money that is available to satisfy lien claims if someone in the chain does not get paid. The holdback must be retained for 55 days after the contract is substantially completed, abandoned, or terminated. After those 55 days, if no liens have been filed, the holdback can be released.

There is one important exception: no holdback can be retained from workers, material suppliers, architects, or engineers. They must be paid the full amount owing.

For trades business owners, this means two things. First, if you are a subcontractor, expect that 10% of your invoiced amount will be held back by the general contractor — build that into your cash flow planning. Second, if you hire subcontractors of your own, you are legally required to hold back 10% from them. Failing to hold back the required amount can make you personally liable for lien claims that could have been covered by the holdback.

Filing Deadlines

The Builders Lien Act sets strict deadlines for filing a lien, and missing them means losing the right to lien entirely.

A lien must be filed within 45 days of the date the contract is completed, terminated, or abandoned. If a Certificate of Completion has been issued for the contract or subcontract, the 45-day clock starts from the date of that certificate.

For subcontractors and workers, this is critical: your 45-day deadline may be triggered by the completion of the head contract, not your subcontract. If the general contract is completed or a Certificate of Completion is issued and you are not aware of it, your filing window can close without you realizing it.

A lien is filed by submitting the prescribed form — Form 5 — at the Land Title Office where the property is registered. The form requires a description of the work or materials provided, the amount claimed, and the legal description of the property. Filing fees apply.

Trust Obligations

The Builders Lien Act also imposes trust obligations on contractors and subcontractors. Money received on account of a construction contract is considered trust funds. The contractor or subcontractor is the trustee, and the people they have hired or purchased materials from are the beneficiaries.

What this means in practice is that money received for a construction project must be used to pay the people who worked on that project. A contractor who receives payment from an owner and uses it for personal expenses or to fund a different project before paying their subcontractors is breaching a legal trust obligation. This can have serious legal consequences beyond the lien itself.

For trades business owners managing multiple projects simultaneously, this requires disciplined financial management. Funds from Project A should be used to pay Project A expenses. Commingling funds across projects creates both legal risk and cash flow confusion.

What Happens After a Lien Is Filed

Filing a lien is not the end of the process — it is the beginning of a legal proceeding. Once a lien is filed against a property title, the lien claimant must commence a court action in the BC Supreme Court within one year to enforce it. If no action is started within that year, the lien expires.

Property owners and general contractors can also take steps to have liens removed. A lien can be discharged by paying the claimed amount into court, posting security, or by court order if the lien is found to be invalid.

In practice, the filing of a lien is often enough to prompt payment or negotiation. Property owners generally want liens removed from their title quickly, which gives the lien claimant meaningful leverage in resolving payment disputes.

Protecting Yourself

The best protection against non-payment is good business practices applied consistently. Use written contracts that clearly define scope, payment terms, and timelines. Invoice promptly and follow up on overdue payments immediately. Know who you are contracting with and whether they have a history of payment problems. Keep records of all work performed, materials delivered, and communications about the project.

If payment becomes an issue, act quickly. The 45-day filing deadline is absolute and runs regardless of whether you are still negotiating. Many subcontractors lose their lien rights because they trusted that payment was coming and waited too long. Filing a lien does not mean you cannot continue negotiating — it simply preserves your legal rights while you do.

Because the Builders Lien Act involves strict deadlines and legal procedures, consulting a lawyer experienced in construction law is strongly recommended when a payment dispute arises. The cost of legal advice is almost always less than the cost of losing your right to collect.

Watch

Watch this overview of builders liens for contractors, including how the lien process works and how to file one to recover money you are owed on a construction project.

Reflect

Think about the payment chain in a typical construction project in your trade.

• Where are the points in that chain where payment could break down? How would the Builders Lien Act protect you at each of those points?
• How would you build the 10% holdback into your cash flow planning if you are working as a subcontractor on larger projects?
• What systems would you put in place to make sure you never miss the 45-day filing deadline if a payment dispute arises?