Video - The Difference Between A Builder's And Mechanic's Lien

Our construction litigation team at FH&P Lawyers is experienced in a wide range of construction-related matters from design development to tendering and resolution of any disputes. We are trusted advisors of contractors, project managers, engineers and developers and can assist throughout every step of the construction process. When challenging issues arise our team will find a practical and timely solution to keep the project moving.

A frequent discussion that Associate David Horvath explains to his clients is the differences between a Builder's Lien versus a Mechanic's Lien. Watch his explanation...

Transcript:

A common question that I get from clients is, “what is the difference between a mechanic's lien and a builder’s lien?”

A mechanic's lien is a lien started by the mechanic who hasn't been paid for services they rendered with respect to a vehicle. So if they've done some work the person hasn't paid for and they're still in possession of the vehicle, they can pursue a mechanic's lien keep that vehicle in their possession until that invoice is paid. After 90 days they can sell that vehicle to pay for that invoice and returning the rest of the money is to the debtor.

Alternatively, they can make an agreement with the debtor to allow the possession of the vehicle to return to the debtor. That agreement will be registered in the British Columbia personal property registry under that vehicle’s title. Now, these liens are complex in that they must adhere to the relevant legislation, they must be done in the prescribed form in a very specific manner and if any part of that form or any part of that process is not here to, that lien can be removed and it may be voided altogether.

Now the difference between a mechanic's lien and a builder's lien as the name suggests, the builder or the contractor is able to put a lien on the property on which they're working. So they are hired by a person to construct a home for instance and that person refuses to pay the contractor at the completion of the project. They can then put a lien on the property whereby there's an actual instrument that’s put on the property’s title preventing any sale or transfer for the full amount of the contract price or what they're owed. Now the contractor only has 45 days after completion or sufficient completion of the project, that's very important because after that, that claim disappears altogether. It is very important to ensure that you're within that 45 day period and ensure that you contact a lawyer before you proceed because as with a mechanic's lien, a builder’s lien in itself is very complex and how you do one and how you register one with Land Title Office can be complicated and similarly with the mechanic's lien. What can happen is there may be deficiencies in that builder’s lien and it may be very easy to remove or may be voided by the Land Title Office and your claim is gone at that stage.

One of the main differences beyond that between the mechanic's lien and the builder’s lien is that with the builder’s lien you must commence an action within one year of filing that builder’s lien. With a mechanics lien, you do not need to proceed with a claim. One of the reasons for having this lien system is to ensure there's an effective way to proceed with these disputes, these kinds of disputes happen all the time and proceeding with full-blown litigation it can be very complicated and time-consuming. This lien process on the other hand can be quite cheap and can be quite quick. In many cases with respect to builder’s liens, settle before they go into a full-blown legation because what you are pursuing is what you are owed for that job. That can be complicated as far as how much a project was completed and similarly with the mechanic’s lien. If you have any concerns or questions about either one of those issues contact FH&P Lawyers and we can definitely help you out.