By: Catriona Otto-Johnston and Kendra Heinz
Are you out of time to register your lien? It depends!
Under section 41 of the Builders’ Lien Act (the “BLA”) a lien must be registered within 45 days (or 90 days for an oil or gas well or well site) after the last day services or materials are furnished. However, if you have a continuing contract, a legal concept known as a “prevenient arrangement”, the work done on one property may operate to extend the time for registering a lien against all properties.
What is a Prevenient Arrangement?
A prevenient arrangement exists where there is a preliminary understanding between parties that they are entering into an ongoing relationship for the supply of services or materials over time, often at multiple locations. The parties do not necessarily have to have a binding contract, or to define all terms on which materials and services are to be supplied. Rather, the prevenient arrangement links together a series of contracts into one continuing contract.
If a prevenient arrangement exists, a contractor or supplier has 45 days to register a lien for the entire value of the contract from the last day services or materials were provided, as opposed to filing with 45 days of each service or material furnished.
Validity of a Lien and Prevenient Arrangements
In the recent decision of Picturesque Landscaping Inc. v. Moderno Inc., 2018 ABQB 5, the Court considered whether to declare a builder’s lien invalid and grant summary dismissal of the lienholder’s claim. The lienholder, Picturesque Landscaping Inc. (“Picturesque”) registered its lien on property owned by Moderno Inc. (“Moderno”) on February 12, 2016. The parties disputed when Picturesque last provided services or furnished materials so as to start the 45 limitation period to register a lien. Picturesque maintained work was being done at the site up to January 4, 2016. Moderno argued the work was completed prior to the end of December 2015.
The parties agreed that on December 29, 2015 Picturesque finished work at a different Moderno property. The Court reasoned that if a prevenient arrangement existed, the work done on the other Moderno property could operate to extend the time for Picturesque to register a lien against all properties. For this reason the Court declined to declare the lien in valid and declined to grant Moderno summary dismissal. While the Court did not ultimately decide whether a prevenient arrangement was in place, its decision shows that such an arrangement can have a significant impact on validity of a lien and the limitation period to register a lien.
How Does This Decision Affect You?
If you are a contractor or supplier it is crucial you meet the time requirements of the BLA to ensure you have a valid lien. As this case shows, a prevenient arrangement can extend the time to register a lien against all properties, where work was completed or materials furnished at different times or locations. However, if there is a dispute as to whether your contract is in fact a prevenient arrangement, this case indicates that a full trial may be required in order to prove the nature of your agreement and validity of your lien.
If you are uncertain as to whether or not you have a prevenient arrangement or you would like information as to how to calculate your relevant lien period, Field Law can help. For more information, contact Catriona Otto-Johnston, lawyer and Partner with Field Law, to discuss your options.