The Builders Lien Holdback, Explained for BC Homeowners

Most homeowners hear the words builders lien for the first time when one has already been registered against their property. By then the conversation is a legal one, and the options are narrower and more expensive than they were a month earlier.

The holdback is the part of British Columbia law designed to keep that from happening. It is not complicated. It is just widely misunderstood, and routinely not operated on smaller residential projects.

The problem the law is solving

On a typical Metro Vancouver build there is one contract the homeowner signs and a long chain of people behind it. The general contractor hires framers, electricians, plumbers, drywallers, and suppliers. The homeowner never meets most of them and has no contract with any of them.

If the money stops moving somewhere in that chain, the person who did not get paid did real work that increased the value of one specific property. The Builders Lien Act gives them a claim against that property, even though their agreement was with the contractor rather than the owner.

So a homeowner can pay every invoice, in full and on time, and still face a lien. That is the scenario worth understanding before it happens, because the instinct to pay everything quickly to stay on good terms is exactly the wrong instinct here.

What the Act actually requires

The Builders Lien Act sets a holdback of 10 percent of the value of the work or material as it is performed or supplied. The duty to retain it sits with the person making payment, which on a residential project is the owner.

In practice this means each draw is paid less the statutory portion. The builder invoices for the work completed in that period, the owner retains 10 percent of that value, and the remainder is paid out. That retained money is not a penalty and it is not a bargaining chip. It is security held on behalf of everyone downstream who could otherwise register against the title.

The holdback is not money withheld from your builder. It is money the law asks you to hold on behalf of people you will never meet.

Two clocks, and people mix them up

The holdback is not held indefinitely. But the Act runs two separate periods off the same triggering event, and conflating them is the most common mistake we see, including in material written by people who should know better.

• Filing a lien: section 20 allows a claim of lien to be filed no later than 45 days after a certificate of completion is issued, or after the head contract is completed, abandoned or terminated.
• Releasing the holdback: section 8 provides that the holdback period expires at the end of 55 days after those same events.
• If a lien has been filed in the meantime, the holdback stays put and the matter becomes a legal one.

Ten days separate those two dates, and the gap exists for a reason. A lien filed on day 45 still has to be dealt with, and paying the holdback out at day 45 defeats the purpose of holding it. We have seen the two numbers used interchangeably in plenty of places, so it is worth reading them carefully against the sections themselves.

The certificate of completion is the piece most homeowners have never heard of, and it matters because it starts both clocks for one finished subtrade well before the overall project is done. A framing subcontract certified in month four runs its periods while the interior work is still underway. Ask your builder how certificates are being handled on your project instead of assuming a single date governs everything.

Where it goes wrong on real projects

The failures we see are almost never disagreements about what the law says. They are failures to operate it at all.

A holdback gets waived to keep a draw simple during a cash-tight month. Or it is nominally retained but never separated from the project's general cash, so when the time comes to prove it exists, it does not in any meaningful sense. Or the release happens on a handshake before the lien period has actually run, which defeats the purpose of having held it.

Worth knowing that the separate account is not merely good practice. Section 5 requires an owner to establish a holdback account at a savings institution for each contract, pay the retained amount into it, and administer it jointly with the contractor. The section carries an exemption tied to the value of the contract, so it does not reach every job, and whether it reaches yours is a question for a BC construction lawyer rather than an assumption based on project size.

How this connects to your draw schedule

The holdback should be built into the draw schedule at the contract stage rather than negotiated at each payment. We cover how draws and payment structures work on a build separately, and the holdback belongs in that same conversation.

A draw schedule that never mentions the holdback is a warning sign. It means either the builder is not operating it, or the owner is expected to work it out on their own partway through the project, which is when it becomes an awkward conversation instead of a procedural one.

This applies on the development side too

Landowners entering a multiplex development partnership sometimes assume lien risk is purely the builder's problem. It is not, because the lien attaches to the land, and in a partnership structure the land is usually the landowner's contribution.

We walk through how risk is allocated between parties in how a development partnership protects homeowners and in the GP/LP partnership model. Lien exposure is one of the specific items a landowner should confirm is addressed in the agreement rather than assumed away.

What to ask before the first draw

Four questions, asked at contract stage, prevent most of the trouble.

• Is the holdback shown as its own line on the draw schedule, at the statutory percentage?
• Where is it held, and can I see that it is actually being retained?
• How are certificates of completion being handled, and for which contracts?
• What confirmation will I get that subtrades have been paid before each draw is released?

That last question is the one homeowners forget. A statutory declaration from the builder confirming subtrades have been paid to date is a normal part of a well-run draw process, and asking for it is not an insult to anyone.

A change that is coming, but is not here yet

One item to keep on your radar rather than plan around. The Construction Prompt Payment Act received Royal Assent in November 2025. It is not in force, because it comes into force by regulation and those regulations have not been made.

When it is brought into force it shortens the holdback period in section 8 from 55 days to 46, and abolishes liens against a required holdback. It does not change the 10 percent figure and it does not change the 45 day filing deadline in section 20.

Until it is proclaimed, the current numbers govern. If you are signing a contract now that will run past the point where this could change, that is a specific question to raise with your lawyer rather than something to guess at.

If a lien lands anyway

Call a BC construction lawyer that week. The Act sets specific procedures and timelines for responding, and options genuinely narrow as those deadlines pass. Do not release the holdback while a lien sits on title, and do not wait for the builder and the subtrade to sort it out privately.

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