Terra Services Inc. v. Her Majesty the Queen 2018 NLSC 221 As the Province of Newfoundland and Labrador remains a major driver of local construction and development the issue frequently arises as to whether the protections intended by the Mechanics’ Lien Act (“MLA”) can be extended to these provincial projects. As a general rule, the […]read more
New Builder’s Lien Amendments & Regulations
Recent amendments to the Builder’s Lien Act and new Builders Lien Regulations, effective June 30, 2017, allow for early release of holdbacks to subcontractors and alter how finishing holdbacks are calculated. These changes are particularly helpful to subcontractors who finish their work at an earlier stage of a project.
Early Holdback Release
When a subcontractor completes their work on a project, they can request their contract be certified complete by the Project Consultant (or the owner and general contractor if there is no Project Consultant). When the subcontract is certified complete, the owner has 10 days to post a notice of subcontract completion on the public portion of the Construction Association of Nova Scotia website and in a prominent location in the job site office, if such office exists. The notice must include the name and address of the owner, contractor, subcontractor, and person on whose certificate payments are to be made, as well as a description of the work or services performed, a description of the land on which work was performed, and the date of certified completion. The owner can then release the portion of the holdback related to the subcontractor’s work 60 days after completion is certified. This allows any lien rights related to the subcontractor’s work to expire. The owner must also confirm that any liens regarding the subcontractor’s work have been satisfied, discharged, or vacated.
The regulations create an exception to the early release holdback for owners doing work on single-family residences owned or occupied by the owner or their spouse if the value of the work is $75,000 or less.
Finishing Holdback Calculation
Prior to the amendments, an owner was required to hold a finishing holdback of 2.5% of the overall project value. Now, if after 60 days from when the contract is deemed to be substantially performed, there are still services or materials needed to fully complete the contract, the owner is to maintain a 10% holdback of the price of the remaining services or materials to be supplied for completion. The finishing holdback must be held for 60 days after the project is 100% complete.
The regulations also create notice requirements following substantial completion of the contract. The owner has 10 days after the general contractor achieves substantial performance of the contract to post a notice of substantial performance on the public portion of the Construction Association of Nova Scotia website and in a prominent location in the job site office, if such office exists. The notice must include the name and address of the owner and contractor, a description of the work or services performed, a description of the land on which work was performed, and the date on which it was substantially completed.