Liens, Holdback and the Statutory Trust in British Columbia

Three things in this page reverse what is widely said about British Columbia, and each of them changes advice. British Columbia does have a statutory construction trust. The lien filing period is 45 days and has never been 46. And the Shimco lien on the holdback fund is good law today, though it will not be once the Construction Prompt Payment Act is proclaimed.

The statutory content below is stronger evidence than most of this cluster. The BC Laws consolidation of the Builders Lien Act, SBC 1997, c 45 was readable and was cross-checked across two passes, so its section numbers are primary-verified. No BC judgment was read in original text, so Shimco and Kingdom Langley below rest on converging secondary sources and carry no paragraph pinpoints. For the full deadline map see the British Columbia delay claim clocks, and for the doctrine those clocks police, the British Columbia extension-of-time hub.

British Columbia has a statutory construction trust, at Builders Lien Act ss 10–14

It does, and the contrary assumption, carried for years in commentary and, until this revision, in this corpus, is simply wrong. Section 10 constitutes money received by a contractor or subcontractor on account of the contract price a trust fund, with the recipient as trustee. A second and separate trust sits at s 5(2) over the holdback account. Both are additional to the holdback itself.

"Money received by a contractor or subcontractor on account of the price of the contract or subcontract constitutes a trust fund for the benefit of persons engaged in connection with the improvement by that contractor or subcontractor and the contractor or subcontractor is the trustee of the fund."

The trustee must not appropriate the fund to its own use until the beneficiaries are paid, and a lien claimant who is paid out is subrogated. Architects, engineers and material suppliers are not trustees of a s 10 trust under s 10(4), though they must properly allocate among improvements.

Two further provisions have direct delay utility. Section 12 requires a person receiving payment out of a trust fund constituted for a particular improvement to credit it against the debt for that improvement, which defeats the common practice of applying a payment against the oldest invoice across a rolling multi-project account, and forces the project-specific balance a prolongation claim is actually measured against. Section 13 provides that money in a holdback account is not subject to garnishment, and that money paid into court remains bound by the trusts. The practical effect is that the BC holdback is judgment-proof against an unrelated creditor of your payer.

One caution on the penalty. Appropriation or conversion of trust money is an offence, and directors and officers who knowingly assent are liable, but CONFLICT the corpus cannot say whether the $10,000 fine and two-year imprisonment sit at s 11 or at the separate s 45 offence provision, because s 11's own marginal heading is a deeming and safe-harbour heading and the Act's table of contents shows a distinct s 45 with s 46 applying the Offence Act. Do not cite the penalty to a section number without re-verification. And note what s 11 does say: commingling funds alone is not a breach of trust. That is a substantial softening of orthodox trust law, it substantially weakens tracing, and it is why BC trust claims are in practice run as debt-plus-personal-liability claims rather than as proprietary tracing claims.

The three limits: money received, one tier, and a hard year

The BC trust is real but narrow, and each limit bites in exactly the situation a delay dispute creates. The res is money received, not receivable. The trust reaches one tier only. And s 14 imposes a hard one-year limitation running from head-contract completion, abandonment or termination, not from discovery. A claimant can preserve its contract claim and still lose its trust claim.

Layer: jurisdictional comparison. The BC row rests on primary statutory text obtained from BC Laws. The Ontario and Alberta rows rest on secondary commentary and are included for contrast, not as statements of those provinces' law.

The received-versus-receivable divergence is the one to hold onto. If the owner never pays, there is no trust res in the contractor's hands, and the subcontractor's trust claim is empty. The BC trust does not solve non-payment at the top of the chain, which is precisely the scenario a delay dispute creates when an owner withholds against liquidated damages. Ontario's "receivable" limb reaches that case. BC's does not. The one-tier rule compounds it: a second-tier subcontractor has no trust claim against the head contractor at all, only against its own first-tier subcontractor.

Section 14 itself:

"An action by a beneficiary or against a trustee of a trust created under section 10 must not be commenced later than one year after (a) the head contract is completed, abandoned or terminated, or (b) if the owner did not engage a head contractor, the completion or abandonment of the improvement in respect of which the money over which a trust is claimed became available."

Stated in terms: sections 10 and 14 are the answer for a BC delay claimant whose 45-day lien has expired. A claimant who missed the filing date, or was caught by an owner's 21-day notice, or whose lien was extinguished under s 22, still has a year from head-contract completion, abandonment or termination to sue its own payer for money that payer actually received. That is materially more generous than the position this corpus previously assumed. It is also not a substitute for the lien: the year runs from an event, not from knowledge, and it can expire before the two-year contract limitation under the Limitation Act, SBC 2012, c 13. Diarise it separately, as a date in its own right. See limitation periods and claim accrual.

The holdback, the holdback account, and the exemption nobody expects

Section 4 requires a 10% holdback on each contract and each subcontract a cascade, one per contractual link, regardless of the payment terms in the contract. Section 5 requires the owner to establish a holdback account at a savings institution and administer it jointly with the contractor, amounts in it are charged with liens and held in trust under s 5(2). Failure to comply is a default under the contract.

Then the exemption. Section 5(7) disapplies the holdback-account requirement to government entities and to contracts under $100,000. On a public BC project there is therefore no holdback account: the owner retains the 10%, but need not segregate it in a joint account, and there is no s 5(2) trust over it either. A subcontractor with a delay claim on a provincial or health-authority job has materially weaker cash security than on an equivalent private project, and correspondingly greater dependence on the s 10 trust against its own contractor and on filing its lien on time.

Two provisions run the other way and are among the most useful in the Act for a claimant caught downstream of a delay default:

• Section 6, the holdback cannot be raided for delay damages. The required holdback "must not be applied to the completion of the contract or subcontract, or for the payment of damages, or for any other purpose" until the possibility of a lien arising under the person in default is exhausted, and improper application does not reduce the payer's liability. In terms: an owner facing a contractor in delay cannot apply the statutory 10% to liquidated damages or completion costs while lien rights remain live. Retention in excess of the required holdback is different, s 34 expressly permits applying excess holdback on default, but the statutory 10% is ring-fenced.
• Section 34, the lien fund is not reduced by the owner's counterclaim. Section 34, "Limit of claims", caps aggregate recovery against the owner at the greater of the amount owing to the contractor and subcontractors or the required holdback, and provides that the amount owing is not reduced by counterclaims, by payments made in bad faith, or by payments made after a lien was filed with actual notice of it. So an owner's liquidated-damages counterclaim does not shrink the lien fund, and the familiar position that "there is nothing left because we are claiming LDs" fails. CORRECTION s 34 is the lien-fund provision, s 32 is "Priority of secured lender", and distribution is in ss 36–38, whose detail is UNVERIFIED in this corpus.

45 days is filing, 55 days is holdback

The "45 or 46 days" conflict is resolved, and it was never a conflict about lien filing. Forty-five days is the lien filing period under s 20, now and after proclamation. Fifty-five days is the holdback period under s 8, and it is that figure that the Construction Prompt Payment Act will reduce to 46 on proclamation. Never present 46 as a lien filing period.

Layer: jurisdictional, and dated. The "now" column rests on primary statutory text from BC Laws. The "after proclamation" column rests on two or more independent secondary sources, since the CPPA text could not be obtained. The amending section numbers are not available and are not guessed here.

The Act received Royal Assent on 27 November 2025 and is not in force as at 10 August 2026, no adjudication authority has been designated and the regulation consultation closed on 7 July 2026. Because adjudication will apply only to contracts entered into after commencement, essentially every BC contract live today will never be subject to BC adjudication, which is why the lien and trust machinery, not adjudication, is the live payment remedy for a delayed BC project. See prompt payment and adjudication in BC.

One inference worth stating as an inference: compressing the holdback period from 55 to 46 days materially erodes a claimant's practical leverage, because the holdback release date is the de facto deadline by which a claimant must decide whether to lien. Combined with the abolition of the Shimco lien, the net effect of proclamation will be to make early, disciplined notice-and-lien practice considerably more important than it is today.

The clock runs from the head contract, not from your own scope

This is the single most-missed feature of the BC Act. Where a certificate of completion has issued, claims of lien may be filed no later than 45 days after its date. Where none has issued, the 45 days runs from the head contract being completed, abandoned or terminated, or from the improvement being completed or abandoned. It does not run from the subcontractor finishing its own scope. A lien not filed in time is extinguished under s 22, and the registrar has no duty to inquire into timeliness.

It cuts both ways. Favourably, a subcontractor that finished long ago on a project that is running late still has live lien rights, because the head-contract clock has not started, delay preserves lien rights. Adversely, because termination of the head contract is itself a trigger, and termination is a common consequence of severe delay, a sudden termination starts a 45-day clock against every subcontractor on the project at once, usually without their knowledge.

There is an escape hatch, and it should be used far more often than it is. Section 7 obliges a defined payment certifier to issue a certificate of completion within 10 days of a request, with copies out within 7 days and notice posted prominently on site. The court may declare completion if a certifier unreasonably refuses, and the certifier is personally liable for failures causing loss. A finished early-trade subcontractor on a delayed project can apply for a certificate for its own subcontract, starting its own 45-day clock deliberately and releasing its own holdback rather than waiting on a head contract that may not complete for years.

Perfection is a separate step and a separate trap. Under s 33 an action must be commenced and a certificate of pending litigation registered within one year of filing the lien. Both, cumulatively, doing one without the other is fatal. But an owner, or a lien claimant who has commenced an action, may serve a notice to commence an action giving 21 days, and a mailed notice is conclusively deemed served on the eighth day after mailing, roughly 13 days of real time. A claimant sitting on a filed lien while negotiating an extension of time can lose it in under a month.

The Shimco lien is good law, and what to do with it while it lasts

Shimco Metal Erectors Ltd v Design Steel Constructors Ltd, 2003 BCCA 193 held that the Act creates a lien on the statutory holdback fund that is distinct from and independent of the lien against the land under s 2, arising from the s 4 language that the required holdback "is subject to liens and charged with payment". A claimant may therefore assert a claim against the holdback fund even where the land lien has been lost. British Columbia is the only Canadian jurisdiction with this dual-lien model, a comparative claim the corpus marks UNVERIFIED as an exhaustive statement.

Any note or checklist saying the Shimco lien has been abolished is wrong today and would push a claimant into abandoning a live security interest. Kingdom Langley Project LP v WQC Mechanical Ltd, 2025 BCCA 169 declined to overturn it, holding that mere disagreement with Shimco did not warrant doing so and that legislative intervention rather than judicial action is required. That intervention is enacted but not in force.

What a claimant does with it, between now and proclamation, follows from the problems the Court of Appeal itself identified. Neither Shimco nor the Act says how notice of a holdback lien is given, how it is enforced, or how it is cancelled, ss 23–24, which allow removal by payment or cancellation on posting security, apply only to liens against land and improvements, so there is no corresponding discharge mechanism. And if even one Shimco claim is asserted before the holdback period expires, it is uncertain how the holdback can safely be disbursed. In practice that means: assert the holdback claim in addition to, and not instead of, the land lien, assert it in writing to the owner and the payment certifier before the 55-day holdback period expires, since that is the date the fund is otherwise paid out. And expect that the owner cannot buy its way out of it in the ordinary way. On a delayed project where the holdback is large and the owner wants it released, that is real and awkward leverage. CONFLICT earlier BC commentary suggested a first-instance practice of removing Shimco liens against security had developed. The 2025 judgment as reported records continuing uncertainty notwithstanding, and the judgment could not be read.

One distractor to exclude: the Commercial Liens Act, SBC 2022, c 9, in force 30 June 2025, made no changes to the Builders Lien Act. It governs repairers' and storers' liens on goods, not improvements to land.

Does a BC lien secure a delay claim at all?

The corpus cannot answer this, and says so. No BC authority was located on whether a delay or prolongation claim is lienable, either way, and the point is recorded UNVERIFIED for BC. That is a live gap, not a settled permissive answer, and it should be pleaded around rather than assumed.

What can be said is what s 34 does and does not do. It fixes the ceiling, the greater of the amount owing or the required holdback, undiminished by the owner's counterclaim, but it says nothing about the character of the claim that may be brought within that ceiling. The two questions are independent, and a successful s 34 argument about the size of the fund does not answer an objection that a prolongation claim is not lienable at all.

Neither neighbouring answer travels. Ontario draws the line at price versus damages, extended supply is lienable, damages such as unabsorbed overhead and lost profit on other work are not. Alberta draws it differently again, asking whether the cost is directly related to the liened work, and even that test is in CONFLICT in the sources, with no appellate resolution. Two provinces, two different tests, neither of them British Columbia law. Compare Ontario liens, holdback and security and Alberta liens and the lien fund, and read both as contrast rather than as guidance.

The working posture until BC authority exists: plead the lien for amounts owing for work and material actually provided, keep the prolongation heads separately particularised so an attack on their lienability does not contaminate the whole lien, and treat the s 10 trust and the ordinary contract claim as the routes for anything that looks like damages.

Which clock expires first on a delayed project

In order, from a head contract completed, abandoned or terminated on day zero: the lien filing period at 45 days. The holdback period at 55 days, after which payment out discharges liens not already filed or proceeded on, the one-year s 14 trust period. The one-year s 33 period from the date of lien filing, compressible to 21 days on the owner's notice, and only then the two-year discovery limitation and the 15-year ultimate period. The statutory lien clocks expire long before the ordinary limitation, and a single event, head contract termination, starts most of them simultaneously.

Three negative findings shape how that sequence is managed, and each is a searched finding rather than a gap. There is no BC authority on when a delay or prolongation claim accrues, the most defensible candidate is the certifier's or owner's refusal, but no BC decision says so. There is no express BC statutory provision permitting contractual variation of a limitation period, and no equivalent of Ontario's s 22(5), which makes BC the least certain major Canadian jurisdiction on whether the parties can shorten or extend the period by agreement. And no BC decision has considered the lienability question above, so a lien-reduction application on that ground will be argued from other provinces' cases.

The practical summary for anyone arriving from Ontario, Alberta or outside Canada: run the Builders Lien Act calendar first and the contract's own notice provisions alongside it, and treat the Limitation Act as the last line rather than the operative one. In British Columbia the two-year limitation is rarely the deadline that decides whether a delay claim gets paid.

Sobre este material El contenido de la biblioteca es información general sobre la práctica de las reclamaciones de construcción, no asesoramiento jurídico. El derecho a reclamar, los plazos y el procedimiento se rigen por su propio contrato y por el derecho del lugar donde se ejecuta la obra. Revisado el 10 de agosto de 2026 · Informar de una corrección