The 10% builders lien holdback in BC: the rules every builder needs

Under BC’s Builders Lien Act, whoever is primarily liable on a contract or subcontract retains a 10% holdback; a claim of lien must be filed within 45 days of the certificate of completion or of the head contract being completed, abandoned or terminated; the holdback may be released 55 days after the same trigger if title is clear; owners keep the holdback in a joint holdback account on contracts of $100,000 or more unless a lender holds it; and contract money is trust money for the trades below you, with personal liability for misusing it.

The clocks: 45 and 55 days

The 10-day gap between the two clocks is deliberate: it gives the payer time to search title after the lien window closes before releasing. On a strata project each lot is deemed completed no later than first occupancy, so the clocks run lot by lot.

The 10% holdback

Section 4(1): the person primarily liable on each contract or subcontract retains 10% of the greater of the value of work and material provided and the payments made. It applies at every link: the owner holds back from you, you hold back from each subcontractor, your plumber holds back from their sub-sub. You cannot contract out of it; section 42 voids any agreement that excludes the Act. On a progress-draw job the rule is: pay 90% of certified value, retain 10%, every draw, cumulatively.

Section 4(6) lists who you do not hold back from: workers, material suppliers, architects and engineers. A material supplier supplies only material. A window company that drops windows in the driveway is a supplier; pay in full. One that supplies and installs is a subcontractor; hold back. Holding back from a supplier is a breach, and the supplier can lien for the full amount.

Section 6: the holdback is not a deficiency fund. If a drywaller walks off owing their taper, the drywaller’s holdback answers first for the taper’s possible lien; you cannot spend it on a replacement until that exposure is cleared. Want a deficiency holdback? Write a separate contractual one.

The holdback account and the $100,000 threshold

Section 5 is the rule most small builders have never been told about. The owner must open a holdback account at a savings institution (a bank or credit union) for each contract under which a lien may arise, deposit the holdback as it is retained, and administer the account jointly with the contractor. The money is held in trust and cannot be paid out without both signatures. If the owner fails to deposit, that is a default, and the contractor may suspend work on ten days’ written notice.

Exemptions: the owner is the government or a listed public body; the contract is under $100,000 (s. 5(8)); or a lending savings institution retains the holdback in the owner’s place under section 4(4), in which case section 5 does not apply (s. 5(4)). That last one is why most financed custom homes have no account: the lender funds 90% of each draw and keeps the 10% in the loan. On an unfinanced $900,000 custom home the owner must open the account, and most do not know it. Put a clause in your contract that says who holds the 10%, where, and when it is released. The threshold is about the account, not the holdback: on an $85,000 garage-and-suite contract the owner still retains 10%.

Certificates of completion

On a Part 9 custom home with no consultant administering the contract, section 7(1) makes the owner the payment certifier for the head contract, and the owner and general contractor together the certifier for each subcontract. On a written request the certifier must decide within 10 days and, if the work is substantially performed (the 3%, 2%, 1% cost-to-complete test in section 1(2)), issue a Form 3 certificate, then within 7 days deliver copies and post a Form 2 notice on site. The certificate starts that subcontract’s clocks, which lets you release an excavator’s holdback in month three instead of a year later (s. 9). Courts enforce the timelines strictly: in Clough Pacific Joint Venture v AECOM Canada Ltd, 2025 BCSC 164, a certificate issued and posted late was held invalid, so the clock never started from it. Decide inside 10 days, use the prescribed form, deliver and post inside 7 days, photograph the posting.

Dealing with a lien on your project

A claim of lien is filed at the Land Title Office on Form 5. Once on title, the owner cannot sell or refinance cleanly, the lender stops the next draw, and the owner’s holdback from you is charged with the lien (ss. 4(9), 34). An $8,000 lien filed on day 44 can freeze a $90,000 holdback. Getting it off title: payment into court (s. 23), security such as a lien bond (s. 24), or cancellation where the lien is extinguished or abusive (s. 25). Search title on myLTSA before every draw and every release.

Trust money and personal liability

Section 10: every dollar you receive on account of the contract price is held in trust for the subcontractors, workers and suppliers under you until they are paid. Section 11 makes misuse an offence: a fine up to $10,000, up to two years in jail, or both, and directors and officers who knowingly assent are personally guilty. Breach of trust is also a civil claim that survives a corporate insolvency. The bookkeeping that keeps you out of it: job-cost separation, no borrowing between projects, subs paid before profit is drawn.

What is changing

The Construction Prompt Payment Act received Royal Assent on November 27, 2025 but, as of October 2026, is not in force. When proclaimed it will apply to contracts signed after that date and amend the Builders Lien Act: the holdback period drops from 55 days to 46, the separate lien against the holdback (the Shimco lien) is abolished, and demolition is added to the definition of improvement. Until then, 55 days and all-or-nothing.

A system that works on a small job

1. Every subcontract states the 10% statutory holdback and the 55-day release, subject to a clear title search.
2. One holdback tracking sheet: a line per contract with value, holdback retained, trigger date, day 45, day 55.
3. Progress-draw package: invoice, schedule of values, holdback calculation, sub statutory declarations, lien search.
4. Blank Form 3 and Form 2 in the project binder; calendar day 10 on every request.

This is the 2-hour, 2-point Builders Lien Act course in the CPD Pass, under legal issues. It is education, not legal advice; when real money is on the line, call a construction lawyer. Course page: Builders Lien Act and Holdbacks in Practice. The Act is on BC Laws.