b'LEGAL COLUMNLIMITATIONS ON THE USE BY NATHAN MACDERMOTT AND ANDREW PRIOR, PIHL LAWOF PROGRESSIVE RELEASE ANDNot only can compliance with the Act in relation to progressive release of holdback funds be difficult, it can STATUTORY DECLARATIONSalso be costly and cause delays. Each time that the payment certifier has to review specific portions of the project, time PROGRESSIVE RELEASE will be spent away from other areas of the project which OF HOLDBACKS might need their attention. Further, that additional time Section 7 of the Builders Lien Act allows for what iswill also require compensation. Each time the owner or head commonly known as the progressive release of the holdbackcontractor is required to release holdback funds, in addition funds during the course of a project. These provisions ofto internal administration time they are also required to the Act are commonly used on larger projects to allowperform the required searches to confirm that there are no subcontractors to receive the holdback funds in relationliens or Supreme Court actions commenced in relation to the to their specific work by requesting the projects paymentpart of the project for which the funds are being released. If certifier (often the coordinating professional) to confirm thatthis is not done, the owner or head contractor could be liable their contracts or subcontracts are complete. In theory, oncefor improperly releasing the holdback funds. All of these the payment certifier confirms this, the holdback period canfactors make it difficult to justify progressively releasing the commence for that portion of the work and the funds can beholdback funds, which is why it is not often done on projects, released after the 55-day period has run its course. Althoughespecially smaller ones.this appears to be a fairly simple way to have those funds released prior to the entire project completing, it is not thatSTATUTORY DECLARATIONSsimple in practice. It is a common misconception that the issuance of a statutory Much like the remainder of the Act, these provisions requiredeclaration prior to the expiry of the lien or holdback period strict compliance in order for the parties to have met theiris sufficient to allow the owner or head contractor to release obligations so that holdback funds can be properly paid out.the holdback funds. Although a statutory declaration may If the payment certifier agrees that the specific portion ofgive the party some piece of mind, it does not provide any the work is substantially completed, they must within sevenfurther protection as it is not contemplated within the Act. days deliver a copy of the certificate to the owner, the headJust because a statutory declaration was issued on day 25 of contractor and the person who requested the confirmationthe holdback period by a contractor, it does not prevent a lien of completion. In that time the payment certifier must alsoclaimant from filing a lien prior to the 46th day or starting provide copies of the certificate to any lienholders who havea Supreme Court action prior to the 56th day. Further, it requested it and post a notice of certification on the projectdoes not protect a party who has paid out a holdback. As a site. The issuance, delivery and posting of the notice must allresult, releasing the holdback funds on the basis of a statutory be done in strict compliance with the Act in order to protectdeclaration can still result in an improper release of the the parties. As an example, if the notice is posted on a securityholdback and can increase an owners or head contractors trailer on the street beside the project site it was found to notliability. be posted on the site and therefore the posting is invalid for the purposes of the Act (see Alterra Property Group Ltd. v. Doka Canada Ltd., 2008 BCSC 1880). In the event that theDisclaimer: The information provided in this article is merely for payment certifier does not strictly comply with the Act, theyinformational purposes and is not legal advice. Prior to dealing with the can be held liable to any party who suffers loss or damage as aholdback or any other provisions of the Builders Lien Act, result of that non-compliance. parties should seek independent legal advice.56 SOUTHERN INTERIOR CONSTRUCTION ASSOCIATION'