Amendments to Builders’ Lien Act: Early Release of Holdback

May 31, 2013

The Nova Scotia Legislature recently passed amendments to the Builders’ Lien Act. The primary purpose of the amendments is to allow an earlier release of holdback funds.

EARLY RELEASE

Once the amendments come into effect, a contractor or subcontractor can request that its contract or work be certified complete by a Project Consultant. If there is no Project Consultant then the owner and general contractor can confirm the completion of the work and issue a certificate. It is anticipated Regulations will be implemented detailing how and to what extent notice of certification will be circulated.

Once the contract is certified as complete, the holdback in relation to that contract can be released provided:

  1. 60 days have passed to ensure that any lien rights which may have arisen from the subcontractor’s work have expired; and
  2. The owner confirms any registered liens regarding the subcontractor’s work have been satisfied or discharged.

FINISHING HOLDBACK

In addition to the amendments allowing for an earlier release of holdback funds, the amendments to the Act alter the rules regarding “finishing holdbacks”.

Under the old provisions, an owner was required to maintain a finishing holdback in the amount of 2.5% of the overall project value. Under the amendments if, after 60 days from when the contract is deemed to be substantially performed, services or materials are still needed to fully complete the contract, a separate holdback must be maintained in the amount of 10% of the price of the remaining services or materials as they are supplied.

This finishing holdback cannot be released until 60 days after the project is 100% complete.

These amendments will be of particular benefit to contractors who perform their work at the earlier stages of a project.

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