A contractor has a common law right to exercise what is commonly referred to as a “builder’s lien” over property of his employer, as security for payment for work carried out on the property, until paid.
A lien is a right of retention available to a person who has contributed material or manpower to increase the value of another’s movable or immovable property.
To enforce a lien, a contractor must be in possession of the property in question. Furthermore, such possession must be exercised by an overt act to demonstrate to any would-be possessor that the contractor retains possession and intends to remain in possession, such as by fencing off the property and erecting a sign proclaiming that he exercises a lien over such property.
A contractor may exercise a builder’s lien, provided that he has not waived the right to do so.
Many construction contracts require a contractor to waive its right to a builder’s lien. Therefore, it is imperative that both contractor and employer read and fully understand the contract governing their relationship.
Furthermore, a contractor may be lawfully dispossessed of the property and thereby relinquish his right to retain in circumstances where the contractor loses possession to another person who is acting in good faith (the bona fide possessor).
Therefore, to act lawfully in enforcing a builder’s lien, the contractor must take possession in good faith and remain in possession.
If a contractor cannot exercise his right of retention, he may alternatively have a claim for unjustified enrichment. Such a claim arises where one person receives benefit or value from another at the expense of the latter, whereafter the former has an obligation to reimburse the latter.
Contact C&A Friedlander for expert construction law advice tailored to your circumstances.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).