Alberta Builders’ Liens: What Contractors and Owners Need to Know

Construction projects in Alberta are fast-paced and often involve multiple parties. Property owners, developers, contractors, subcontractors, engineers, and suppliers all rely on timely performance and timely payment. When that payment is delayed or withheld, Alberta law provides a powerful remedy: the builders’ lien.

For contractors and subcontractors, a lien is often the only tool available to secure payment for completed work or delivered materials. For property owners, liens can create complications with financing, slow down construction schedules, and even impact property sales. Understanding how builders’ liens operate under Alberta’s Prompt Payment and Construction Lien Act, which came into effect in 2022, is critical for both sides of a construction project.

What Is a Builders’ Lien?

A builders’ lien is a legal claim registered against the title of a property by a person or company that has not been paid for work or materials provided to improve that property. The lien creates a legal interest in the property itself, which can prevent refinancing, block sales, and cause delays until the issue is resolved.

The Prompt Payment and Construction Lien Act modernized Alberta’s lien law. It replaced the older Builders’ Lien Act and introduced prompt payment rules intended to improve cash flow in the construction industry while maintaining lien rights for unpaid contributors.

Who Can File a Builders’ Lien in Alberta?

The right to file a lien extends to a wide range of participants in a construction project. Alberta law gives lien rights to:

• General contractors hired directly by the owner
• Subcontractors working under contractors at any level of the construction chain
• Suppliers of materials, equipment, or products that are incorporated into the project
• Professionals such as engineers or architects, in certain circumstances

Essentially, if you contribute to the improvement of land or a building and you are not paid, you may have the right to file a lien. This broad protection is intended to make sure that everyone who adds value to a project has a way to secure payment.

Strict Deadlines for Filing a Lien

Lien rights are powerful but also come with strict timelines. Missing a deadline can eliminate lien rights altogether. In Alberta, the timelines are:

• General construction work: 60 days from the last day of providing labour or materials
• Oil and gas well sites: 90 days
• Work related to improvements for a dwelling: 60 days

Once a lien is registered, it must be enforced by starting a court action within 180 days. If no action is filed within this period, the lien will expire and the rights are lost.

Because these deadlines are so short, contractors and subcontractors should seek legal advice as soon as payment problems arise.

Holdbacks and Payment Rules Under Alberta Law

One of the most important features of the Prompt Payment and Construction Lien Act is its holdback and payment rules.

Holdback

Owners are required to retain a 10 percent holdback from each payment made under a construction contract. This money is held to protect against unpaid claims further down the payment chain. The holdback is typically released 60 days after the completion of the work, as long as no liens have been filed during that period.

Prompt Payment Timelines

The Act also introduced strict payment rules designed to keep money flowing in the industry:

   •           Contractors must issue invoices in a prescribed form

   •           Owners must pay proper invoices within 28 days

   •           Contractors who receive payment must pay their subcontractors within 7 days

These rules address a long-standing problem in Alberta construction: chronic payment delays. The goal is to reduce the number of lien filings by ensuring timely payments at every stage of the project.

How Builders’ Liens Affect Owners

While liens protect contractors and subcontractors, they can create significant problems for property owners.

• Liens are registered on title, which clouds ownership and prevents refinancing or sale until resolved
• Ongoing construction may be delayed if financing is disrupted by a lien
• Owners may be required to pay money into court or post security to discharge a lien in order to keep a project moving

Importantly, liens can still be filed even if the owner has already paid the general contractor. If funds do not flow properly down the chain to subcontractors and suppliers, those unpaid parties may still file liens against the property. This makes it essential for owners to properly manage holdbacks and confirm that payments are being passed down.

Resolving Builders’ Lien Disputes

Builders’ lien disputes can be stressful and costly if not handled efficiently. Fortunately, many are resolved before reaching a full trial.

Negotiation

Often disputes arise simply from miscommunication or delays. When supported by proper documentation such as invoices, contracts, and progress reports, many claims can be resolved through direct negotiation.

Alternative Dispute Resolution

Mediation and arbitration are increasingly common in Alberta construction disputes. These processes are faster and less expensive than court litigation, while still providing binding or enforceable outcomes.

Court Proceedings

If negotiation or alternative dispute resolution fails, lien claimants must bring a court action to validate the lien and determine the amount owed. Alberta courts will review whether the lien was filed correctly and whether the work or materials were provided as claimed. The court may order payment, enforce the lien against the property, or dismiss the claim if it is not valid.

Best Practices for Contractors

For contractors, subcontractors, and suppliers, protecting your rights requires planning and organization:

• Always use written contracts that clearly outline payment terms and project scope
• Keep detailed records of invoices, receipts, site conditions, and communications
• Track lien filing deadlines carefully and act quickly if payment is delayed
• Seek legal advice before deadlines expire to avoid losing rights

Best Practices for Owners

Owners must also be proactive to minimize risks:

• Retain the 10 percent statutory holdback from each progress payment
• Ensure proper invoices are received and reviewed promptly
• Confirm that payments are flowing from contractors to subcontractors and suppliers
• Address disputes quickly to avoid liens being filed in the first place
• Consult legal counsel if a lien is registered to explore options for discharge or defence

Conclusion: Protecting Your Rights in Alberta Construction

Builders’ liens are one of the most powerful legal tools available in Alberta’s construction industry. For contractors, subcontractors, and suppliers, liens ensure that work and materials are paid for. For owners, liens can present serious challenges if they are not managed properly.

The Prompt Payment and Construction Lien Act requires careful attention to holdbacks, invoicing rules, and strict deadlines. Missing these requirements can mean losing rights or facing unexpected financial liability.

At OP Lawyers, our civil litigation and construction law team understands the pressures of Alberta construction projects. Whether you are a contractor considering a lien, a subcontractor struggling to get paid, or an owner facing a lien on your property, we can guide you through the process. With timely advice, practical strategies, and strong advocacy, we help our clients protect their interests and move projects forward with confidence.