A recent decision of the BC Supreme Court has provided some good news for owners who wish to post security to have a claim of builders lien removed from title. In Tylon Steepe Homes Ltd. v. Pont 2009 BCSC 253, the Court was asked to consider the appropriate amount of the $255,982 lien to be posted as security in an application pursuant to s. 24 of the Builders Lien Act. The Court relied on the 2008 Court of Appeal decision, Q West Van Homes Inc. v. Fran-Car Aluminum Inc. (reported in Construction Law Bulletin issued January 2009) with respect to determining the amount of security to be posted. In so doing, the Court picked up on a comment made by the Court of Appeal questioning whether the standard industry practice of posting 10-15% of the face value of the lien as security for costs was valid at law. It concluded there was no legal requirement to post any amount as security for costs in the ordinary course of a s. 24 application.
Prior to this decision, when an owner required clear title, but disputed the amount or validity of the lien on title, standard practice was to post the full amount of the lien plus security for costs. If the lien was sizable, this could be an additional burden on the owner’s finances. As a result of this decision, s.24 applications and agreements are now being made solely on the value of the lien, not including any amount for security for costs.