Builders Lien Limitation Periods Are Back!

Parties on all sides of construction contracts including, owners, contractors, subcontractors, material suppliers, and consultants should be aware that the recent suspension of limitation periods has been softened.  On March 26, 2020, the Minister of Public Safety and Solicitor General issued Ministerial Order no. M086 titled Limitation Periods (COVID-19) Order (the “Original Order”). The Original Order temporarily suspended certain limitations periods in the province of British Columbia, and had been slated to continue until the current state of emergency declared on March 18, 2020 expired or was cancelled.

On April 8, 2020, by way of a further Ministerial Order no. M098 titled Limitation Periods (COVID-19) Order No. 2 (the “New Order”), the Original Order suspending all limitation periods is now amended to make certain exclusions from the general suspension of limitation periods.  These exclusions include mandatory limitation period and any other mandatory time period established under the following enactments:

–       the Builders Lien Act (the “Act”); and

–       Division 5 [Builders Liens and Other Charges] of Part 5 [Property] of the Strata Property Act.

What Is a Limitation Period?

Limitation periods refer to the timeframe within which a legal claim must be brought forth.  These periods typically begin to run upon the occurrence of loss or damage but may be extended under certain circumstances begin once a potential claimant becomes aware of the loss of damage.  Once the limitation period expires, the person loses the right to begin a legal case. The duration of the applicable limitation period will ultimately turn on the type of claim and what court the claim will be filed in.

Why Were Limitation Periods Suspended?

In short the initial suspension of limitation periods was a necessary result in the face of COVID-19 related delays and inabilities to access most Court services, as well as in an effort to slow the spread of the virus.  As of March 18, 2020, the British Columbia Supreme Court ordered the suspension of all regular operations until further notice. On March 25, 2020, the Supreme Court Registries closed, no longer providing in-person services during the suspension of the Court’s regular operations.

Limitation Periods and Builders Liens

If you are a party to a construction contract in B.C., you are likely already familiar with the deadlines for filing builders liens and related deadlines for release of holdback funds as are set out in the Act. As an owner, the filing of a builders lien impacts the flow of funds on a construction project. Any holdback payments cannot be released until all builders liens have first been paid.

The Act stipulates that builders liens must be filed within 45 days after the date on which a certificate of completion is issued, or (depending on the circumstances) the head contract is completed, abandoned or terminated, or the improvement is completed or abandoned.

Enforcement action on a claim of lien is also required to be commenced within 1 year of the lien being filed, or, within 21 days of service of a Notice to Commence.

Under the Original Order, the one year limitation period for commencing an action to enforce a claim of lien, and the twenty-one day period for commencing an action after service of a Notice to Commence, were suspended. This meant that if a contractor or material supplier had previously filed a lien, and the deadline to commence the action to perfect the lien was upcoming, that deadline was suspended until the state of emergency in B.C. expired or was cancelled.

Implications of the New Order

With the New Order, it is back to business as usual where builder’s liens are concerned and the original limitation periods are again in place, effective as of April 15, 2020. This means that limitation periods that may have been suspended under the Original Order began running again.  If your limitation period expired while the Original Order was in force, you may now have limited time to act.

While this blog gives a general overview of the potential impact of the Old Order and New Order and it should not be taken as legal advice. If you or your business needs assistance navigating any construction related matters please contact Jennifer Williams, Tony Anderson or one of our experienced lawyers in Owen Bird’s Real Estate Development or Construction Dispute practice groups.

Categories: Construction Disputes, COVID-19, Real Estate Development