Contracts and Prevention | Contracts & Prevention
Contracts That Prevent Liens
You cannot contract your way out of the Act. What you can do is make sure the money reaches the people who could otherwise file, and prove it before each payment leaves.
The clause that does nothing
Section 42 provides that certain acts, agreements and assignments are void, and an agreement that purports to waive the operation of the Act is among them. A no-lien clause in a construction contract does not stop a subcontractor from registering a claim against your title.
This matters because owners do rely on these clauses. A contract is signed, the clause is pointed to, the holdback is not retained, and the first claim arrives from a trade who never signed that contract in the first place.
Treat any suggestion that lien rights have been contracted away as a reason to check the holdback more carefully, not less.
Statutory declarations before each draw
The practical control is documentary. Before releasing a progress payment, require a statutory declaration from the general contractor confirming that all subcontractors, workers and suppliers who have been paid to date have in fact been paid.
This does two things. It puts the contractor on record, with the seriousness a sworn declaration carries, and it creates a moment each month where the question is actually asked rather than assumed.
It is not a guarantee. A contractor who is prepared to swear a false declaration exists. But the combination of a declaration and a retained holdback covers most of what goes wrong on a small build.
Joint cheques and direct payment
Where you already know a particular subcontractor is the risk, a joint cheque made out to the general contractor and that subcontractor together ensures the money cannot be diverted on the way down.
This is a targeted tool rather than a default. Used across every trade it becomes unworkable, and it can interfere with the contractual relationship between the general and their subs. Used on the one or two trades carrying the largest exposure, it is effective.
Raise it with your lawyer before writing it into a contract, because how it interacts with your payment terms matters.
Search title before you pay
The cheapest control on this list is a title search before each significant draw and again between day 46 and day 55 before releasing the holdback.
A search is inexpensive and it converts an assumption into a fact. The alternative is releasing money and finding out afterwards that a claim was registered a week earlier.
Combined with retaining the statutory holdback and paying it on day 55 rather than day 45, this is most of what an owner can do without a lawyer in the room.
Best For
- ✓ Owners who want controls that work before a claim exists
- ✓ Self-managed builds paying trades on monthly draws
- ✓ Projects with one or two large-exposure subcontractors
Usually Fails When
- ✕ You rely on a no-lien clause instead of retaining the holdback
- ✕ Statutory declarations are collected but never read
- ✕ Title is only searched once, after the project is finished
What To Verify Before Spending Money
- → That a statutory declaration is on file for each draw released
- → That title was searched before each significant payment
- → That the holdback release is scheduled for day 55 after a clear search
Frequently asked questions
Does a no-lien clause work in British Columbia?
No. Section 42 of the Builders Lien Act makes void any agreement that purports to waive the operation of the Act, so a no-lien clause does not prevent a subcontractor from registering a claim against your title. Owners who rely on such a clause instead of retaining the statutory holdback end up with no protection at all.
What is a statutory declaration in construction payments?
It is a sworn statement from the contractor confirming that subcontractors, workers and suppliers paid to date have in fact been paid. Requiring one before each progress draw puts the contractor on record and creates a monthly checkpoint where payment down the chain is verified rather than assumed, which catches problems while the holdback still exists.
How can an owner prevent a builders lien?
Retain the 10% holdback required by section 4, require a statutory declaration before each draw, search title before significant payments, and release the holdback on day 55 rather than day 45. These four controls together address most of what goes wrong on a small build, and none of them require a dispute to have started.
Are joint cheques a good idea on a multiplex build?
They work well as a targeted tool where one or two subcontractors carry the largest exposure, because a cheque payable to both the general contractor and that subcontractor cannot be diverted on the way down. Applied to every trade they become unworkable and can interfere with the general contractor's own contracts, so discuss the approach with your lawyer first.
When should I search title during construction?
Before each significant progress draw, and again between day 46 and day 55 before releasing the holdback. A title search is inexpensive and it replaces an assumption with a fact. Searching only at the end of the project means discovering registered claims after money has already gone out the door.
Can a contractor be required to prove subcontractors were paid?
Yes, and it is standard practice to require it before releasing a draw. A statutory declaration is the usual instrument. Section 10 of the Builders Lien Act also treats money received on account of the contract price as a trust fund for those the contractor engaged, which gives the request a statutory backdrop.
Does a statutory declaration guarantee no liens will be filed?
No. A contractor willing to swear a false declaration can still leave trades unpaid, so the declaration is a control rather than a guarantee. Its value comes from being combined with a properly retained holdback, so that when a claim does arrive the fund to answer it already exists.
What is the single most effective step an owner can take?
Retaining the 10% holdback required by section 4 on every progress payment. It is the only measure that creates an actual fund to answer a claim from someone you have no contract with, and unlike a no-lien clause it cannot be contracted away, because section 42 voids agreements purporting to waive the Act.
Official Sources Referenced
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