Builders’ Liens (from the Perspective of a Home Owner)
If you are building a home or doing renovations, the contractors you hire may in turn hire subcontractors to do work on your property. Both contractors, and subcontractors, can register a lien against your property if they are not paid, or if the subcontractor is not paid by the contractor.
When you make payments to your contractor, it is important to hold back 10% of each payment for 60 days from the last date of work or supply of material to the property. If no liens have been registered within 60 days, the 10% hold back can be released to the contractor. Within 60 days of the last date of work, if a subcontractor registers a lien, or makes the owner aware that it has not been paid by the contractor, the owner will have the 10% hold back funds to pay the subcontractor. The owner is not responsible to pay more than the 10% hold back.
When a contractor or subcontractor registers a builders' lien against property, the property essentially becomes security for the outstanding debt the contractor is claiming as owing for services or materials supplied to the property. If the owner sells the property, the creditor will be paid first before the owner receives any sale proceeds.
In addition to the lien, if the contractor does not file a Statement of Claim at court and register a Certificate of Lis Pendens at the Land Registration Office within 105 days of the completion of work or supply of material to the property, the lien becomes void and can be removed from the property by a lawyer.
If a lien and Certificate of Lis Pendens is filed, and there are deficiencies in the work or materials supplied to the property, the owner can argue that the amount of the lien claimed is not justified and file a motion at Supreme Court to have the lien discharged. The owner could ask to pay the amount of the lien, plus an additional 25%, into court to be held until the claim is decided. Once the lien is removed from the property, the owner once again has the ability to sell or mortgage.
A lawyer can provide advice about defending a lien, assist in counter-claiming against the contractor for deficiencies, and negotiations to have the lien removed from the property.
Please note this is not legal advice for your specific situation.
