Construction-industry professionals are often faced with requests to waive their lien rights. Many will already be aware that the British Columbia Builders Lien Act (the “BC Act”) irrefutably prohibits parties from contracting out of the remedies the BC Act provides:
42(2) An agreement that this Act is not to apply, or that the remedies provided by it are not to be available for a person’s benefit, is void.
Notwithstanding Section 42(2) of the BC Act, as a precondition of being paid, contractors, subcontractors, workers, and consultants in British Columbia continue to be asked to waive their lien rights. Parties often feel pressured to sign waiver forms, believing they are obligated to do so in support of a progress draw and/or final invoice. Industry participants should know and understand that in many provinces and territories their lien rights cannot be waived.
In our legal practice and extensive on-site experience, we have seen and reviewed forms presented to our clients for approval that seek to limit or waive lien rights. One example is a form that was previously published by the Canadian Construction Association (“CCA”), entitled Waiver of Lien (Form 8B). Our CCA contact has confirmed that Form 8B is no longer a current form and should be disregarded. Despite this, many continue to use and attempt to enforce this form.
To the extent lien-waiver forms seek to limit any rights afforded under the BC Act, they have absolutely no legal effect and are void in the first instance. In fact, most jurisdictions in Canada have lien legislation containing lien-waiver prevention clauses, similar to Section 42(2) of the BC Act.
The following five provinces categorically disallow the practice of waiving or limiting lien rights, whether verbally or by written agreement:
- British Columbia;
- Alberta (subject to further changes to Bill 37 — Builders’ Lien (Prompt Payment) Amendment Act);
- Saskatchewan;
- Manitoba; and
- Ontario.
In contrast, the following provinces and territories allow the practice of waiving or limiting lien rights:
- Quebec;
- New Brunswick;
- Nova Scotia;
- Prince Edward Island;
- Newfoundland and Labrador;
- Yukon;
- Northwest Territories; and
- Nunavut.
Lien legislation in these provinces and territories restrict the circumstances in which parties can waive their lien rights. Therefore, close scrutiny should be paid before lien-waiver agreements are drafted and/or signed.
The most crucial thing to remember is that in the event you or a member of your project team is asked to sign a lien-waiver form or contract containing such a clause, you should seek legal advice from a lawyer qualified to practice construction law in your province. In the event the project is located in a province or territory that prohibits or limits the practice of waving lien rights, then lien-waiver forms or contract clauses seeking to limit lien rights will be of no force or effect.
In support of this article, we reviewed every provincial and territorial lien legislation and created a reference chart detailing each Canadian lien-waiver clause, including comments with respect to exemptions and exclusions to each. The following chart is provided for informational purposes only and does not constitute legal advice.
Summary of Provincial and Territorial Lien-waiver Clauses:
Summary of Canadian Lien Waiver Provisions
| Province / Territory |
Lien Waiver Allowed? |
Lien-waiver Provisions |
Comments |
| British Columbia |
No
|
Builders Lien Act, [SBC 1997], c. 45, s. 42:
42 … (2) An agreement that this Act is not to apply, or that the remedies provided by it are not to be available for a person's benefit, is void. |
Nil
|
| Alberta |
No |
Builders' Lien Act, RSA 2000, c. B-7, s. 5:
5 An agreement by any person that this Act does not apply or that the remedies provided by it are not to be available for the person's benefit is against public policy and void. |
Nil |
| Saskatchewan |
No |
Builders' Lien Act, Statutes of Saskatchewan, c. B-7.1, s. 99:
99 (1) Any covenant in any agreement by any person who provides services or materials to an improvement that this Act or any provision of this Act does not apply is void.
(2) Every contract or subcontract related to an improvement shall be deemed to be amended insofar as is necessary to be in conformity with this Act. |
Nil |
| Manitoba |
No |
Builders' Lien Act, CCSM, c. B91, ss. 11 and 12:
11 Every agreement, oral or written, express or implied, on the part of any person
- that provides or purports to provide that this Act does not apply to him; or
- that provides or purports to provide that remedies available under this Act are not to be available for his benefit; or
- that waives or purports to waive any lien or right of lien under this Act is against public policy and void.
12 Every device by a person and every payment made for the purpose of defeating or impairing a lien or a trust created under this Act is against public policy and void. |
Nil |
| Ontario |
No |
Construction Act, RSO 1990, c. C.30, s. 4:
4 An agreement by any person who supplies services or materials to an improvement that this Act does not apply to the person or that the remedies provided by it are not available for the benefit of the person is void. |
Nil |
| Quebec |
Yes |
2726. A legal hypothec in favour of the persons having taken part in the construction or renovation of an immovable may not charge any other immovable. It exists only in favour of the architect, engineer, supplier of materials, workman and contractor or subcontractor for the work requested by the owner of the immovable, or for the materials or services supplied or prepared by them for the work. It is not necessary to publish a legal hypothec for it to exist.
2936. Any renunciation or restriction of the right to publish a right which shall or may be published, as well as any penal clause relating thereto, is without effect. |
Quebec's Civil Code Article 2726 creates a builders' lien referred to as a "legal construction hypothec", which must be registered against the project lands in the land register. While it is possible to waive one’s right to a legal construction hypothec, one cannot waive the right to publish a legal hypothec (see Article 2936 below). As a result, particular attention must be paid to the wording of a construction hypothec waiver clause. |
| New Brunswick |
Yes |
Mechanics' Lien Act, RSNB 1973, c. M-6, ss. 5 and 6:
5 No agreement deprives a person not a party thereto and otherwise entitled to a lien under this Act of the benefit of the lien. 6 (1) An agreement by a labourer that this Act does not apply or that the remedies provided by it are not available for his benefit is void. |
Only parties to a lien waiver agreement, with the exception of labourers, may waive their lien rights. |
| Nova Scotia |
Yes |
Builders' Lien Act, RS, c. 277, s. 4:
4 (1) Every agreement, verbal or written, expressed or implied, on the part of any person employed in any kind of manual labour intended to be dealt with in this Act, that this Act shall not apply, or that the remedies provided by it shall not be available for the benefit of such person, shall be null and void.
(2) This Section does not apply to a manager, officer or foreman. |
Only managers, officers, and/or foremen may waive their lien rights (the terms "manager", "officer", and/or "foreman" are not defined in the legislation) |
| Prince Edward Island |
Yes |
Mechanics' Lien Act, c. M-4, ss. 4 – 6:
No agreement shall deprive any person not a party thereto and otherwise entitled to a lien under this Act of the benefit of the lien.
An agreement by a labourer that this Act does not apply or that the remedies provided by it are not available for his benefit is null and void.
Every device by an owner, contractor, or sub-contractor used to defeat the priority given by this Act to a labourer for his wages is null and void. |
Only parties to a lien waiver agreement, with the exception of labourers, may waive their lien rights. |
| Newfoundland and Labrador |
Yes |
Mechanics' Lien Act, RSN 1970, c. 229, ss. 3 and 4:
3. (1) An agreement, oral or written, expressed or implied, on the part of a worker, that this Act, or a part of it, shall not apply to, or that a remedy provided by it shall not be available for the benefit of, that worker, or which in a way limits or abrogates or in effect limits, modifies or abrogates that remedy, is void and of no effect.
- Subsection (1) does not apply to
- a manager, officer or supervisor; or
- a person whose wages are more than $50 a day.
4. An agreement does not deprive a person, otherwise entitled to a lien under this Act and who is not a party to the agreement, of the benefit of the lien, but the lien attaches, notwithstanding that agreement. |
Only managers, officers, supervisors, and/or a person whose daily wages exceed $50 may waive their lien rights (the terms "manager", "officer", and/or "supervisor" are not defined in the legislation). |
| Yukon |
Yes |
Builders Lien Act, RSY 2002, c. 18, s. 2:
2. No agreement shall deprive anyone otherwise entitled to a lien under this Act, and not a party to the agreement, of the benefit of the lien and the lien shall attach despite that agreement. |
Only parties to a lien waiver agreement may waive their lien rights. Unlike in New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador (assuming a labourer's daily wages do not exceed $50), labourers may waive their lien rights. |
| Northwest Territories |
Yes |
Mechanics Lien Act, RSNWT 1988, c. M-7, s. 2:
2. No agreement shall be held to deprive a person otherwise entitled to a lien under this Act and not a party to the agreement of the benefit of the lien and the lien shall attach notwithstanding the agreement. |
Only parties to a lien waiver agreement may waive their lien rights. Unlike in New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador (assuming a labourer's daily wages do not exceed $50), labourers may waive their lien rights. |
| Nunavut |
Yes |
Consolidation of Mechanics Lien Act, RSNWT 1988, c. M-7, s. 2:
2. No agreement shall be held to deprive a person otherwise entitled to a lien under this Act and not a party to the agreement of the benefit of the lien and the lien shall attach notwithstanding the agreement. |
Only parties to a lien waiver agreement may waive their lien rights. Unlike in New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador (assuming a labourer's daily wages do not exceed $50), labourers may waive their lien rights. |
Tim M. Sportschuetz, of Sportschuetz & Co, is a member of the CBA Construction and Infrastructure Law Section.