Electrical, Mechanical
& Services Contractors
to carry the costs if there is a delay in the
payment chain, and they should consider
a lien within the 40-day limitation period.
Subcontractors only have 40 days from
substantial completion or abandonment
of a project to file a lien and if they fail to
follow that rule, then they may not get paid
either. In that case, they may be chasing
a bankrupt contractor and have no legal
claim against them, and may have no right
against the owner because they are out of
time to file the lien.
Lenders
Banks can be liable in this mess as well.
If an owner sets up mortgage financing
Commercial | Industrial | Institutional
Commercial | Industrial | Institutional
With our diversification of multiple
trades,
it enables us to provide our clients with:
With our diversification of multiple trades,
it enables us to provide our clients with:
it enables us to provide our clients with:
A One-Stop Shop Advantage
Teamwork Approach
Value-Added Engineering
Recommendations on alternative means and methods
Savings due to single source management of multiple
trades creating improved project scheduling.
A One-Stop Shop Advantage
Teamwork Approach
Value-Added Engineering
Recommendations on alternative means and
Savings due to single source management of multiple
traces creating improved project scheduling.
Electrical
Process Piping
Millwrighting
Plumbing
A One-Stop Shop Advantage
Teamwork Approach
Value-Added Engineering
Recommendations on alternative means and
Savings due to single source management of multiple
traces creating improved project scheduling.
Electrical
Process Piping
Millwrighting
Plumbing
methods
Heating
Welding
Gas Fitting
Refrigeration
methods
Air Conditioning
Controls
Instrumentation
Design Build
Heating
Welding
Gas Fitting
Refrigeration
Air Conditioning
Controls
Instrumentation
Design Build
• Electrical
• Process Piping
• Millwrighting
• Plumbing
• Heating
• Welding
• Gas Fitting
• Refrigeration
• Air Conditioning
• Controls
• Instrumentation
• Design Build
204.633.8071 | www.abcosupply.com 1346 Spruce St. | Winnipeg, MB
204.633.8071 | www.abcosupply.com 1346 Spruce St. | Winnipeg, MB
204.633.8071 | www.abcosupply.com 1346 Spruce St. | Winnipeg, MB
PROVIDING THE TOOLS YOU NEED
TO PROTECT YOUR BUSINESS
for a construction project, and the lender
blindly advances money when there are
liens filed, then the lender can be exposed
to claims for advancing funds when there
were unpaid lien claimants. As such, almost
invariably, a lender will do a title search or
compel the lawyer handling the progress
draws to ensure there are no liens on a title
at time of advance.
Bankruptcy
There is a meandering and blurry line
between provincially regulated builders’
liens laws and federal bankruptcy laws.
Who gets paid, and in what priority, is a
complex hierarchy. Ordinarily, if an owner
LEGAL
or contractor, or anyone along the money
chain, goes bankrupt, then bankruptcy
ordinarily eliminates most of their debts.
However, builders’ liens and trust claims
can survive bankruptcy to allow those
claimants to follow the money.
Breach of trust claims
The BLA provides that any receipts by an
owner or a contractor constitute “trust
funds” and can only be used for certain
purposes, primarily payment down the
chain. If an owner takes their construction
mortgage and buys a new boat with those
funds, then they are offside the legislation
and can be sued for non-payment separate
from any lien claim. That means even if the
lien period has run out, then the claim can
continue. Likewise, if a contractor receives
such trust funds and refuses to pay their
subs, then there is a potential “trust claim”
against that contractor, even if they should
go bankrupt. That means if a GC receives
a bunch of money from an owner and
they use it to pay other creditors instead
of paying their lumber supplier or subs
on a contract, then the GC can be held
liable even if they go bankrupt. The BLA
even extends this liability to directors or
officers of a corporate contractor if they
knowingly or were complacent in the
misappropriation. Proving these claims can
be difficult, but there is an avenue of relief
at least.
Parting words
Given the above it becomes extremely
important for all the players to comply with
their obligations to protect their rights and
protect themselves from claims by others.
It is important to follow the rules from all
sides of the equation and to be aware of
the potential timelines because failure to
take advantage of those timelines will leave
companies out in the cold. Unfortunately,
it is often the case that the littlest players
are pecking over the remaining scraps and
those little players are often least able to
weather a delay or endure non-payment. n
Derek D. Cullen practises in the areas of real
estate, and corporate and commercial law with
concentrated practise in construction matters.
Cullen regularly teaches seminars on builders’
liens, tendering, construction litigation and is
a regular advisor to many contractors.
54 | Issue 2 2020 www.carm.ca
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