Unfortunately that isn’t how it has worked out, and contractors often complain that the Construction Lien Act process is an ineffective and far too expensive tool to enforce payment. It should come as no surprise that those who owe the money often delay and frustrate contractors from getting paid.
Recent experience has shown me that this abuse can also come from the other direction.
I acted for a mortgagee who was owed money on a sale of development property. My client took a significant “vendor take back” mortgage. Things went south (why else would I be involved?) and foreclosure proceedings were commenced.
We then found that a contractor had filed a $1.7 million lien against numerous properties, including those my client’s mortgages were on, thereby impeding my client’s goal of foreclosing. This was a particular type of lien, called a “General Lien”.
A General Lien allows a contractor to file a lien against multiple properties where the work was done under a single contract, and the properties are all owned by the same owner.
From the outset the existence of this General Lien seemed suspect, both in terms of amounts and validity.
We fought it. Ultimately, the general contractor (and his lawyers) finally realized the “jig was up.” They dropped the lien and title was cleared.
It was obvious that the lien was slapped onto title for the sole purpose of leveraging some sort of payout. It was improper, and an abuse of the Act. The contractor did not get a dime.
So, for all those who complain about the failures of the Act, I respond by saying it is often not the Act that is the problem, but the unscrupulous people who use it for improper purposes.