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Creditors' Remedies against Debtors (10:III) (view source)
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A lien is a claim, encumbrance, or charge on property (real or personal) for payment of a debt, obligation, or duty. In many cases, a creditor is entitled to place a hold or lien over specific property that has benefitted from the individual’s material or labour. It acts as security from the individual’s material or labour and as security for the payment to the creditor. '''Property liens are complicated and potentially serious. Please refer clients to a lawyer.''' The most common liens are listed below. | A lien is a claim, encumbrance, or charge on property (real or personal) for payment of a debt, obligation, or duty. In many cases, a creditor is entitled to place a hold or lien over specific property that has benefitted from the individual’s material or labour. It acts as security from the individual’s material or labour and as security for the payment to the creditor. '''Property liens are complicated and potentially serious. Please refer clients to a lawyer.''' The most common liens are listed below. | ||
=== 1. Liens on Land (Builder’s Liens) === | |||
'''NOTE:''' Builder’s lien issues involve limitation periods and real property registrations and filings. The '''time limitations are extremely strict'''; solicitors have been known to lose suits because they filed a day late. '''All cases should be referred to a lawyer.''' Refer to: ''Builder’s Lien Act'', SBC 1997, c 45. | |||
p10- | Under the current ''Builder’s Lien Act'', a worker, material supplier, contractor, or sub-contractor who does or causes to be done any work upon, or supplies material, or both, for an improvement, has a lien for the price of the work and material, upon the interest of the owner in the improvement, upon the improvement itself, upon the material delivered to the land, and upon the land itself (s 2). “Price” does not include interest on outstanding accounts: see ''Horseman Bros. Holdings Ltd v Lee'' (1985), 12 CLR 145 (BCCA). | ||
After a claim of lien is filed against land, the lien-holder may enforce their claim by obtaining a court order for the land to be sold (s 31). When a writ is issued, the lien holder must register a certificate of pending litigation against the land (s 33(1)), which prevents any dealings with the title to the land until after the court determines the validity of the claim. No claim of lien can be filed if the claim is for less than $200 (s 17). | |||
==== a) Procedure ==== | |||
A claim of lien on land is filed in the Land Title Office (s 33(1)). A claim of lien must be in the prescribed form or it is extinguished (s 22). It takes effect from the time when work began, or when the first material was supplied for which the lien is claimed. A claim of lien has priority over all judgments, executions, attachments, and receiving orders recovered, issued, or made after that date (s 22). | |||
==== b) Limitation Period ==== | |||
The time for filing a claim of lien is governed by s 20 and the time limitations are strict. '''If a certificate of completion has been issued for a contract or subcontract, the claims of lien of the contractor, subcontractor, or any person engaged by or under the contractor or subcontractor must be filed no later than 45 days after the date on which the certificate of completion was issued.''' If there is no certificate of completion, a claim of lien may be filed no later than 45 days after the head contract or improvement has been completed, abandoned, or terminated. | |||
If a person agrees to have repairs done, they must withhold 10 percent of the value of the work or material as they are actually provided under the contract or subcontract, or the amount of any payment made on account of the contract or subcontract price, whichever is greater, from the contractor for a period of 55 days after the certificate of completion is issued. This covers the possibility of having to pay workers, subcontractors, and suppliers who were not paid for their services by the contractor. This holdback must not be retained from a worker, material supplier, architect, or engineer (s 4(6)). These funds are to be paid into a separate trust account at the time of payment. | |||
In addition, all improvements done with the knowledge, but not at the request, of the owner will be held to be done at the request of the owner (s 3(1)). This rule does not apply to improvements made after the owner files a notice of interest in the Land Title Office. A notice of interest is a prescribed form warning other persons that the owner’s interest in the land is not bound by a lien claimed under the Act for an improvement on the land unless that improvement is undertaken at the express request of the owner (s 1). | |||
Unless an action to enforce a claim of lien is started and a certificate of pending litigation is registered in a Land Title Office within one year, the lien is extinguished (s 33(5)). Note that the owner may require the lien-holder to commence an action within 21 days, by sending the holder of a claim of lien notice in writing (s 33(2)). | |||
'''NOTE:''' Students should be aware that builder’s liens may only be filed at the Supreme Court, and only in the same jurisdiction as the land on which the lien is to be placed. As already mentioned, time limits are extremely strict, so clients should take action without delay. | |||
=== 2. Liens on Chattels (Repairer’s Liens) === | |||
==== a) Possessory Lien and Right to Sell ==== | |||
Under the ''Repairer’s Lien Act'' [''RLA''] every mechanic or other person who has bestowed money, skill or materials upon any chattel for its improvement, has a common law possessory lien on the chattel while it remains in their possession. These people are called garage keepers in the ''RLA''. The lien holder may keep the chattel until paid. Where the person holds the chattel for 90 days, they may sell it upon compliance with statutory provisions (s 2). If the lien holder gives up possession prior to filing a lien, they lose the lien (except with liens on automobiles and aircraft, etc.) and are restricted to ordinary remedies in court. | |||
==== b) Liens on Automobiles, Aircrafts, Boats and Outboard Motors ==== | |||
If a mechanic relinquishes possession of an automobile, aircraft, boat or outboard motor, they do not lose the lien, provided that the debtor, before giving up possession, signed an acknowledgement of indebtedness (e.g. invoice, statement of account, etc.). | |||
==== c) Procedure ==== | |||
Where a garage keeper gives up possession of an automobile, etc., and afterwards files an affidavit with the registrar, the garage keeper may enforce the lien by issuing a warrant for seizure to a licensed bailiff or the sheriff (s 11). The automobile or aircraft may then be sold by following the procedures for the sale of chattels set out in s 2 (s 12). A warrant may only be issued within 180 days of filing the lien (s 11). | |||
==== d) Limitation Period ==== | |||
'''The garage keeper has, pursuant to s 3 of the ''RLA'', 21 days to register a lien once they have given up possession.''' | |||
'''When an affidavit of lien is filed, the lien will expire after 180 days, unless the automobile, etc., has been seized within that period (s 4).''' | |||
A copy of the acknowledgement of indebtedness must be included in the affidavit. If the acknowledgement has not been obtained or is not included, the affidavit is invalid. | |||
If a client’s car has been seized, check with the Registrar-General to determine whether the acknowledgement of indebtedness was properly included, and whether the automobile, etc. was seized before the end of the limitation period: see ''Rudd’s Heavy Equipment Repairs Ltd v Blackstone Paving Ltd'' (1985), 34 ACWS (2d). | |||
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