- The person primarily liable on a contract under which a lien may arise must retain a holdback of 10%.
- The holdback period generally expires 55 days after a certificate of completion is issued, or after completion or abandonment where there is none.
- Rules and time periods can change, so confirm the current figures with a lawyer.
When you buy a new home or one still under construction, unpaid trades and suppliers can sometimes claim a lien against the property. The holdback is a tool in the Builders Lien Act meant to keep money available to pay them.
This article explains the holdback in plain terms, the timelines that go with it, and why it can matter around closing. How it applies to your purchase depends on the contract structure, so a lawyer should confirm.
This article covers the law of British Columbia.
What a holdback is
A holdback is money kept back from payments on a construction contract so that people who worked on or supplied the project have a source of payment. The person primarily liable on each contract or subcontract under which a lien may arise must retain a holdback of 10% of the greater of the value of work or material provided and the amount paid on account.
The holdback cannot be taken from workers, material suppliers, architects or engineers.
The holdback account
The owner must establish a holdback account at a savings institution for each contract under which a lien may arise. The holdback cannot be applied to completing the contract or other purposes until the possibility of a lien is exhausted.
There is an exception: the holdback account requirement does not apply to contracts under $100,000 in aggregate value.
Key timelines
| Item | Rule |
|---|---|
| Holdback period | Expires 55 days after a certificate of completion is issued, or otherwise 55 days after the head contract or improvement is completed or abandoned. |
| Filing a lien | A claim of lien may be filed no later than 45 days after the certificate of completion was issued. |
| Completion decision | The payment certifier must decide within 10 days of a request whether work is complete. |
| Information request | The owner must respond within 10 days of delivery of a request for contract terms, holdback account details and payment particulars. |
Legislation in this area has been under amendment, so check that the periods above are still current before you rely on them.
How it can affect a new home closing
A claim of lien may be filed no later than 45 days after the certificate of completion was issued, while the holdback period expires 55 days after the certificate is issued, so the two periods do not end on the same day. For a buyer, that is why your lawyer will usually look at the status of completion, any certificate of completion, and whether liens are registered against title before you complete.
- A lien holder or trust beneficiary can ask the owner for contract terms and holdback details, and the owner must respond within 10 days.
- The holdback cannot be used for other purposes while a lien is still possible.
- Whether and how the holdback is addressed in your contract of purchase and sale depends on the deal, so ask.
What to do next
- Ask the seller or developer whether a certificate of completion has been issued and when.
- Ask whether a holdback account was required and where it is held.
- Have your lawyer search title for registered liens before closing.
- Keep your own records of any payments and of the completion date.
- Get advice promptly if you receive a notice or a lien appears on title.
Frequently asked questions
How much is the builders lien holdback?
It is 10% of the greater of the value of work or material provided and the amount paid on account.
How long does the holdback last?
The holdback period expires 55 days after a certificate of completion is issued, or otherwise 55 days after the head contract or improvement is completed or abandoned. Confirm current periods before relying on them.
Does every contract need a holdback account?
The owner must set up a holdback account for each contract under which a lien may arise. That requirement does not apply to contracts under $100,000 in aggregate value.
Can I find out about the holdback on my project?
A lien holder or trust beneficiary may request the head contract terms, holdback account details and payment particulars from the owner, who must respond within 10 days of delivery. As a buyer, ask your lawyer how to get this information.
Sources
- Builders Lien Act (BC Laws) — bclaws.gov.bc.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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