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When can my building contractor exercise a builder's lien? PDF Print E-mail
Thursday, 15 September 2011

An owner builder has run into a problem with a labour-only contractor that he hired.  He wrote to us asking for further advice.

I am an owner builder who employed a contractor for labour only.  The contractor did not provide any material or special machinery/tools like whackers, scaffolds, hammers, etc.   The work has now been completed, which took longer than anticipated for various reasons. The contractor has received the full contract amount.   There has been no agreement signed or verbally as to any additional payment.  I have already paid a substantial amount extra because of the extended period of building, but the contractor has now added a substantially higher amount for additional costs.   

I am of the opinion that the claim is excessive and have stated that I am not prepared to accept that I 'owe' them this amount.   They have now executed the 'builder's lien' and locked the house with security locks preventing me from entering the house, or for other contractors to complete their work, i.e. the electrician, etc.   

Are they legally entitled to do this as a 'labour only contractor'?   Would other contractors providing services on this project have the same right?   Where are my rights in this matter?   Where can I find out more?

Les did some investigation in the matter and his advice follows below:

The Builder's Lien is part of a suite of contract documents that provide some leverage to the contractor should things go wrong - as in payment from the employer. The fact is that no contract was signed or even assumed.    There is, therefore, no legal standing for the contractor to exercise his so-called builder's lien.  It never existed and he has no right to it.

The remedy could be costly as you are looking at litigation to resolve the matter.

Variations to the agreed "contract", be it verbally or in writing, are a common dispute at the end of a contract.  Ideally all variations should be reduced to a written instruction with a written cost estimate in reply.  In this case there does not seem to be any written contract which is applicable and therefore the builder has no recourse.

Footnote: 

A Builder's Lien is a contract signed by both the owner and the builder whereby the builder can claim the property that he is working on if the owner fails to pay him for the services that he has lawfully rendered. If the owner provides a "payment guarantee", which is also part of most building contracts, then the builder could be required to waive his lien. Contracts are there for your protection. (See "A Building Contract - Do I need one? ")

 


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Last Updated ( Monday, 19 September 2011 )
 
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