A mechanics lien is a tool used by the construction workers, builders, contractors and suppliers, to ensure payment is received for completed work.
There are five types of claim that can be made under the Mechanics Lien Act in New Brunswick, and each one must be made within a specific time frame, as set out by the Act.
- A claim under the WAGES section of the Act 24(1) must be filed within 30 days of the last day of work. This type of claim is usually filed by employees of a construction company or contractor.
- A claim under the PROVISION OF SERVICE section of the Act 24(2) must be filed within 30 days of the provision of service. This type of claim is usually made by subcontractors of a construction company or contractor.
- A claim under the PROVISION OF BUILDING MATERIALS section of the Act 24(3) must be filed within 60 days of the furnishing of the last material. This type of claim is usually made by suppliers of a construction company or contractor.
- A claim under the CONTRACTOR OR SUBCONTRACTOR section of the Act 24(4) must be filed within 60 days of completion or abandonment of the project. You guessed it – this type of claim is usually made by the contractor or a subcontractor on the project.
- A claim under the CONTRACTOR/SUBCONTRACTOR UNDER SUPERVISION OF ARCHITECT OR ENGINEER section of the Act 25(5) must be filed within 60 days of completion – or of the supervisor failed to give the final certificate of completion within 3 days of actual completion, the claim must be filed within 7 days. Once again, this type of claim is usually made by the contractor or subcontractor on the project.
If you have received a Notice of Lien
If a lien has been placed on your property, it means you owe money to a third party, related to a construction or renovation project. If you have been served with a Notice of Lien, you should consult a lawyer to confirm that proper procedures have been followed, and to determine your ability to pay.
As well, the milestone dates mentioned above (i.e. completion, furnishing of last material, provision of service) may be a matter for debate, and your lawyer can help you clarify these issues.
Property owners should also note that a lien is a charge that should be satisfied prior to sale. If it is not, and the property is sold, the lien will follow the title, and become the responsibility of the new owner.
Filing a Claim for Lien
Every claim is different, and you should consult with a lawyer well in advance of the expiration of the time limits set out above so your lawyer can help you to confirm precisely when your claim must be filed. Your lawyer will also be able to assist you in identifying the steps that you must follow to collect the amounts owed to you, and avoid having your lien vacated.
Property owner responsibilities
Property owners must be cognisant of their obligations under the Act as it is not possible to contract out of its applications.
For example, property owners are required to retain a hold back a portion of the project money (which varies based on the cost of the project) for a period of 60 days. The hold back funds are intended to give some security to the property owner (i.e. the ability to compel a contractor to complete work or satisfy mechanics lien claims should they arise).
As a property owner, your lawyer can assist you as you to identify how much of a hold back you are required to retain, how long you are required to retain it, and how the funds are to be distributed in the event that you are served with a Claim for Lien.
Mechanics Liens are highly technical and will require much diligence on your part to ensure that you respect your rights and obligations. It is important to note that construction law is based on legislation only, which means the rules are subject to change without notice. Your lawyer can help you keep abreast of these changes.