Court Offers Guidance on Deadlines Affecting Lien Claimants
May 24, 2023
One of the main aims of the recently enacted Prompt Payment and Construction Lien Act is to ensure that a property is not encumbered by a lien for an unreasonable period of time. To this end, lien claimants must comply with a series of strict deadlines, including registering a certificate of lis pendens in Alberta’s Land Title Office.
There have been lingering questions regarding how the deadlines associated with filing a certificate of lis pendens apply in the context of Alberta’s land titles system. This issue was discussed in a recent decision from Alberta Court of King’s Bench, and the Court offered guidance on what has been a pain point for many practitioners in the area.
There is a Deadline for Filing a Certificate of Lis Pendens
The Prompt Payment and Construction Lien Act sets out a registration framework that imposes various deadlines on lien claimants. Under section 43 of the Prompt Payment and Construction Lien Act, a certificate of lis pendens must be filed with the Land Titles Office within 180 of the registration of a lien on title. If the deadline is not met, the lien ceases to exist.
This requirement naturally raises the question of when registration of the certificate of lis pendens is deemed to have occurred.
What the Legislation Says About Registration
The Land Title Act says that “registration” means:
- the entering on the certificate of title of a memorandum authorized by this Act or any other Act of an instrument or caveat; and
- the entering in the proper register of any instrument or caveat authorized to be registered, of which a memorandum is not required to be entered on the certificate of title.
Land Title Act Was Amended to Remedy Historical Registration Issue
Before the Prompt Payment and Construction Lien Act was enacted, a lien holder would present a lien for registration, which would either be accepted or rejected on the spot. However, the Registrar was unable to keep up with the volume of claims being submitted, which was jeopardizing the validity of the lien claims that were required to be submitted within a certain timeframe.
To address this, the Land Title Act was amended to change the registration scheme. Now, when a lien is submitted for registration, it gets assigned a registration request number and sits in a queue while waiting to be examined. When registration occurs, the lien is not backdated to the date when it was submitted for registration.
An Important Distinction Between an Instrument Being Registered Versus Submitted
In the case of CCS Contracting Ltd v. Condominium Corporation No 1520090, a lien was submitted for registration in the Alberta Land Title Office on April 8, 2022. It was registered on July 5, 2022. A Statement of Claim was filed on October 5, 2022, which fell within 180 days of the lien being submitted for registration.
The certificate of lis pendens was filed November 21, 2022, falling within 180 days of the registration of the lien. However, if the time period began from when the lien was submitted for registration, it would have fallen outside of the 180-day timeframe stipulated by the Prompt Payment and Construction Lien Act, effectively extinguishing the lien.
Court Holds Deadline Should Run from When Instrument is Registered
In a brief decision, the Court held that, for the purpose of calculating the 180-day timeframe outlined in section 43 of the Prompt Payment and Construction Lien Act, time should run from when the certificate of lis pendens is registered, as opposed to when it is submitted for registration and entered into the registry queue.
In reaching its decision, the Court highlighted several key points.
Request Does Not Constitute Registration
The Court noted that when a claimant submits a request for registration to the Land Title Office and it is formally entered into the Pending Registration Queue, it indicates that the Registrar will review the request at a future date.
This is different from registration proper, since the Registrar has the discretion to, among other things, refuse to register the instrument or cancel it prior to registration.
Case Law Offers Helpful Guidance
The Court referred to the case law on this topic, highlighting the consensus that lien legislation is to be interpreted strictly. However, it is not to be interpreted so strictly as to prejudice the rights of third parties and owners. Further, it should not be interpreted in a way that would be inconsistent with the intention of the legislation.
The Wording of the Legislation is Instructive
Section 14.1(7) of the Land Title Act says that the 180-day time limit is satisfied when the lien is put into the queue. However, at that point, the lien is still only a request as it is not registered until it is examined and placed on title. Further, the Prompt Payment and Construction Lien Act clearly states that the time limit for a certificate of lis pendens runs from the date of registration and not from the date that it is put into the queue.
The Court made it clear that any ambiguity in either piece of legislation should be resolved in favour of the lien claimant. In the case at hand, there would be no prejudice to the owner or to third parties by doing so.
The Future of Lien Claims in Alberta
The Court’s decision in CCS Contracting Ltd v. Condominium Corporation No 1520090 provides some clarification for those impacted by a certificate of lis pendens registration and the various deadlines involved.
However, the case leaves some questions unanswered and potentially raises further questions, such as whether the Court’s reasoning may be interpreted to favour lien claimants over those of owners and third parties, and whether it may be argued that the decision runs counter to the intention of the legislation.
Contact the Construction Lawyers at DBB Law in Calgary for Advice on Construction Disputes and Liens
The experienced team of construction law lawyers at DBB Law frequently advise clients on complex matters involving construction liens. We have a firm grasp of the legislation that applies to these issues, and we provide our clients with thorough advice and representation in construction disputes. If you have questions about a lien or construction-related issue, contact us online or call our office at 403-265-7777.