The construction industry in Alberta is a highly regulated one. Yet at OP Lawyers LLP, our civil litigation lawyers in Calgary often notice that both owners and builders are unfamiliar with the rules and regulations that govern their projects. Whether you are a homeowner building a new house, renovating an older home, developing a commercial property, or you are a builder carrying out these projects, it is critical to understand how Alberta's Prompt Payment and Construction Lien Act (the "PPCLA") affects your rights and obligations.
Misunderstanding the PPCLA can be expensive. Owners can find themselves paying twice for the same work. Builders can lose their lien rights entirely by missing a deadline they didn't realize was running. Below, our Calgary civil lawyers answer some of the most frequently asked questions we receive about construction disputes and liens in Alberta.
1. How long does the builder have to register a valid lien?
Under the PPCLA, a lien must be registered within the statutory "time for registration." In the general (non-oil-and-gas) context, that period is 60 days, but the moment the clock starts depends on the type of claim:
- For materials: 60 days from when the last materials are furnished; and
- For services: 60 days from when the services are completed.
For improvements to an oil or gas well or well site, the time period is extended to 90 days.
Because the trigger date is specific to the type of work, calculating the deadline is not always as simple as it looks. Builders who miscalculate can lose their lien rights, and owners who assume a lien is valid may be mistaken. If you are unsure whether a lien was registered in time, our Calgary civil litigation lawyers can review the timeline for you.
2. Does cleaning up or fixing deficiencies extend the timeline?
Not by itself. This is one of the biggest misconceptions in the industry. Many people believe the 60-day period starts from the last date anyone was physically on site. That is not what the legislation says.
The PPCLA provides that the time limit for registering a lien "is not extended by reason only that something improperly done or omitted to be done … is corrected or done … at a later date." The work performed has to be material. Coming back to the property to clean up, perform touch-ups, or fix work that was improperly done the first time does not restart or extend the deadline.
In other words, the time runs from when the substantive work was completed—not from the day a trade returned to correct a deficiency. Builders who rely on a late clean-up visit to extend their deadline often find their lien is invalid. Owners, on the other hand, should not assume a lien has expired simply because the builder was recently on site. The distinction between material work and minor correction is fact-specific, and it is worth getting legal advice before relying on it.
3. Can subcontractors I have never met register liens against my property?
Yes. Surprising to many owners. Alberta's lien legislation is an exceptional statutory regime. Unlike the common law doctrine of privity (which generally only allows parties to a contract to sue one another), the PPCLA permits unpaid subcontractors and suppliers to lien the owner's land, even where the owner has never met or directly contracted with them. In some cases, these parties can potentially force a sale of the land to satisfy the debt they are owed.
Alberta authorities have historically described registration of a lien as the subcontractor's primary practical protection - and the owner's notice - that the subcontractor has not been paid. It is important to recognize this unique framework. Builders' lien legislation creates an exceptional statutory remedy: because subcontractors and suppliers lack privity with the owner at common law, the statute steps in to give them a charge on the owner's land.
Where security is posted or money is paid into court under section 48 of the PPCLA, the lien rights are transferred to that security. All of this operates within an integrated, business-oriented scheme that is intended to balance the interests of owners against those who supply labour and materials, and to achieve a practical, cost-effective, and timely resolution of disputed construction debt claims. Contact OP Lawyers LLP to speak with one of our Calgary construction lawyers to better understand how you can deal with a lien registered against your property.
4. How do I protect myself from claims by unpaid subcontractors?
The single most important protection is the statutory holdback. Once a lien is registered, Alberta authorities caution that an owner "cannot safely make further payments" under the contract, because the holdback and any unpaid contract amounts become a "lien fund" on which every lien has a charge.
Here is why this matters. When a lien is registered, the holdback and any amount payable under the contract become the lien fund, and every lien has a charge on that fund. The owner's liability is restricted to the total of the lien funds. If the owner fails to comply with the Act and pays out money it should have held back, it may be required to pay over again, the dreaded "pay twice" scenario. Importantly, an owner generally cannot simply set off the costs of completion if a contractor or subcontractor defaults.
A few key tools protect owners:
- Deduct the statutory holdback. The clearest way to protect yourself is to hold back the required 10% from payments. That 10% is what protects the owner from claims by unpaid subcontractors.
- Use section 48 to clear title. While a lien dispute continues, PPCLA section 48 allows the court to remove the lien from title where security is posted or money is paid into court. The money or security then "stands in place of the land," meaning the lien rights transfer to the security and your title is freed up.
- Use the "shoot or get off the pot" mechanism. If an owner (or another affected person) serves written notice requiring the lienholder to commence an action and register a certificate of lis pendens, and the lienholder fails to do so within 30 days, the lien "ceases to exist" (subject to the exception where security has been paid into court).
Perhaps most importantly, speak with a Calgary lawyer before construction begins so that your payment process and timing are structured to comply with the legislation from day one. Our construction litigation lawyers at OP Lawyers LLP regularly help owners set up compliant payment practices and advise builders on protecting their lien rights.
5. Can I withhold funds for deficient work?
Yes, but you have to do it correctly, and two different regimes matter here.
First, the prompt payment regime. An owner must pay a proper invoice within 28 days unless, within 14 days, the owner delivers a prescribed-form notice of dispute that specifies the amount not being paid and sets out the reasons for non-payment. Miss that notice, and you may lose the ability to withhold.
Second, the lien/holdback (lien fund) regime. Alberta cases recognize that, in relation to the "owing but unpaid" component of the lien fund, amounts otherwise payable to a defaulting contractor may be subject to set-off for deficiencies or costs to complete. However, if you are asserting set-off in lien litigation, Alberta procedure treats set-off as something that must be properly pleaded, often by counterclaim rather than as a bare defence.
The bottom line: if there is deficient work, you must provide a notice of non-payment in accordance with the legislation in order to protect yourself from having to pay for that deficient work. Paperwork is everything. The failure to serve a timely, properly completed notice is one of the most common and costly mistakes we see.
6. The lien was placed years ago, but the contractor hasn't done anything since. What can I do?
You likely have options. Once a lien is filed, the builder has 6 months to register a Certificate of Lis Pendens (CLP) and file a Statement of Claim. If the builder has not done so, you can take legal steps to have the registration discharged.
If the CLP has been registered and the Statement of Claim filed within time, but years have then passed with no progress, it is important to speak with a Calgary lawyer, because several options may be available. For example, builders have an obligation to take the matter to trial within 2 years of the registration of the lien. If that timeline has passed, an application may be brought to have the lien removed. There are also other avenues for dismissing a stalled case for delay.
An expired or dormant lien should not be left sitting on your title indefinitely. Our civil litigation lawyers at OP Lawyers LLP regularly bring applications to discharge liens and dismiss stale claims.
Speak to the Civil Litigation Lawyers at OP Lawyers LLP
Construction disputes move quickly, and the deadlines under the PPCLA are unforgiving. Whether you are an owner trying to protect your property from unpaid subcontractors, a builder trying to preserve your lien rights, or either party caught in a stalled dispute, getting advice early can save you significant time and money.
At OP Lawyers LLP, our Calgary civil litigation lawyers regularly represent both owners and builders in construction disputes and lien matters across Alberta. If you have questions about a lien, a holdback, a prompt payment deadline, or a dispute that has dragged on too long, contact OP Lawyers LLP to discuss your situation.
Disclaimer: this article is for general information only and does not constitute legal advice. Construction and lien matters are highly time-sensitive and fact-specific. To discuss your specific circumstances, contact the Calgary construction litigation lawyers at OP Lawyers LLP.