Let’s Take a Look at Some Key Changes to the New Brunswick Mechanic’s Lien
Here’s a brief look at some key changes to New Brunswick mechanic’s lien statute, which came into effect toward the end of 2021.
When Do the Changes Take Effect?
For any contract entered prior to November 1, 2021, you should follow the old statute. All contracts entered on or after November 1, 2021, should follow new statute.
When Is the Lien Deadline?
Under previous statute, the mechanic’s lien deadline was different based on the materials or services provided:
- File the lien within 60 days from last furnishing materials or materials and services.
- When providing only services, file the lien within 30 days from last providing services.
- Those who rent equipment to an owner, contractor, or subcontractor for use on a construction site are considered to have performed a service for which they may have lien rights. If providing rental equipment, file the lien within 30 days from last furnishing.
Under the new statute, all mechanic’s liens should be filed within 60 days, regardless of claimant type (GC, subcontractor, material supplier etc.), however, the 60 days is calculated from varying events. For example, if you are a subcontractor, your lien should be filed within 60 days of the earliest of the following:
(a) a certificate of substantial performance is signed or a declaration of substantial performance is made in respect of the contract to which the subcontract relates;
(b) the contract to which the subcontract relates is completed, abandoned or terminated;
(c) the subcontractor last supplies services or materials for the improvement;
(d) a certificate of completion of subcontract is signed or a declaration of completion of subcontract is made in respect of the subcontractor’s subcontract; and
(e) a certificate of completion of subcontract is signed or a declaration of completion of subcontract is made in respect of a subcontract to which the subcontractor’s subcontract relates.
Clearly, there are several factors that could impact your lien deadline. As a best practice, you should always obtain a legal opinion, to ensure you are best protected. However, to be conservative, you should file your lien within 60 days from last furnishing.
Notice to Owner for Residential Projects
Previously, New Brunswick’s mechanic’s lien statute applied to commercial and residential, and neither had a preliminary notice (or Notice to Owner) requirement.
Under the new statute, there is now a preliminary notice requirement if you are a general contractor furnishing to a residential project. The Notice to Owner must be served within 45 days from first furnishing. If you’re a contractor and you fail to serve the notice, you will not have mechanic’s lien rights.
Fortunately for other parties in the ladder of supply (subcontractors & material suppliers), the Notice to Owner is not required, and if the GC fails to serve its notice, subs’ and suppliers’ lien rights won’t be impacted.
Holdback aka Retainage
Previously, holdback was 15% for contracts over $15,000. Now, holdback is 10% of the contract price on private projects and 5% for public (Crown) projects.
You Have a Right to Information
According to an article by Michael D. Heikkinen and attorney with Cox & Palmer, you can submit a request for information:
The new Act greatly expands lienholders’ rights to information. A party with a right to lien may provide a written request for information from an owner, contractor, subcontractor, Crown or local government, as the case may be. Examples of information that may be requested from an owner or contractor may include:
- the names of all parties to the contract,
- the contract price;
- a copy of any labour and material payment bond;
- a statement of whether the contract provides that payment under the contract shall be based on the completion of specified phases or on the reaching of other milestones;
- the name and address of the financial institution at which a holdback trust account has been established, if applicable, and the name of the account holder;
- a statement of deposits and withdrawals from any holdback trust account; and
- information regarding the state of account between the owner and the contractor.
A party receiving a written request for information must provide it within twenty-one (21) days. A party who fails to provide the requested information within the twenty-one (21) day time limit or who knowingly or negligently misstates the information requested is liable to the person who made the request for any damages suffered as a result.
Seek a Legal Opinion
Please remember, today’s post is not an exhaustive list of the changes implemented under the new New Brunswick mechanic’s lien statute. If you have questions about your specific situation, please contact us and we will work with you and the attorney to obtain a legal opinion.