As the number and size of construction projects have increased in recent years, so too have the number and size of construction disputes in our province.  Builders’ lien legislation not only addresses the resolution of construction disputes but, perhaps more importantly, it addresses how a construction project is conducted from the outset, in order to add certainty and prevent issues from arising. Every province has builders’ lien legislation in some form.  In many respects they are quite similar; however, they all have unique features that may have different practical effects.  In Saskatchewan, construction projects of all shapes and sizes are subject to The Builders’ Lien Act (the “Act”).  Lien legislation in different forms has been around for a long time in Saskatchewan, however, it is still often misunderstood and misused. The Act is often viewed as providing recourse to those at the bottom of the construction pyramid, who for one reason or another may not have been paid.  This is true; however, it also provides a degree of protection to those at all levels of the construction pyramid, including the owner of the project and all those who supply materials and services to it.  The general purpose of the Act is to add certainty for all those involved in the construction process.  As long as a party complies with its responsibilities under the Act, that party will be afforded some level of protection. One of the most important requirements under the Act is the holdback.  Each level of the construction pyramid is required to hold back a minimum of 10% from every payment it makes to the level below it. Although an owner is always vulnerable to having a lien registered against its property, for example when a dispute between the contractor and sub-contractor results in registration of a lien against the owner’s interest in the land, the Act protects the owner’s interest so long as the owner has fulfilled its obligations under the Act, including maintaining the required 10 percent holdback. From a contractor’s or sub-contractor’s perspective, it is a common misconception that once a lien is registered, the registrant is completely protected and will be immediately paid the full amount owing.  This is not the case.  Often, registration of the builders’ lien is just the beginning of a lengthy dispute.  The lien claimant must take steps to enforce their lien and, in most cases, this means bringing a court action.  Generally, a lien claimant has two years from the date of registration of the lien to commence an action to enforce it.  Otherwise the lien claimant risks losing its lien and any potential protection that comes with it. Construction projects can be quite complicated, involving a number of contractors and sub-contractors.  Others can be quite simple involving just the owner and a contractor.  All projects, regardless of size are subject to the provisions of The Builders’ Lien Act.  It is important to consult a lawyer in order to understand your obligations and rights at the beginning of a project, no matter where you fall in the construction pyramid.

About the author: Paul is an associate in the Regina office and practices in all areas of corporate and commercial law including, securities, taxation, real estate and commercial and secured transaction matters.

About McKercher LLP: McKercher LLP is one of Saskatchewan’s oldest, largest law firms with offices in Saskatoon and Regina. Our deep roots and client-first philosophy have made us a top ranked firm by Canadian Lawyer magazine (2011, 2013). Expertise, experience and capacity provide innovative solutions for our clients’ diverse legal issues and complex business transactions. This post is for information purposes only and should not be taken as legal opinions on any specific facts or circumstances.  Counsel should be consulted concerning your own situation and any specific legal questions you may have.