Ask the Expert: Buying a New Condo – Are We Protected From Developer’s Unpaid Bills?

What happens when the developer of your newly built condo fails to pay their subcontractors - is the buyer on the hook? Lawyer Richard Bell explains

Richard Bell New Ask the Expert

Q: We are buying a newly constructed condominium. What happens if the developer has not paid all the people who have worked on the project?

A: In British Columbia, buyers of newly constructed condominiums are protected from claims by contractors, subcontractors, workers and suppliers by the Strata Property Act and the Builders Lien Act.

The Builders Lien Act provides that a lien can be filed against new construction up to 45 days after a “certificate of completion” has been issued or the improvement has been completed.

The Strata Property Act provides that a buyer must retain a holdback of 7 per cent of the purchase price until the earlier of “the date on which the time for filing a lien under the Builders Lien Act expires and the date which is 55 days after the strata lot is conveyed to the purchaser.”

On the closing of a purchase, the buyer’s lawyer or notary public will holdback 7 per cent of the purchase price if the period for filing a builders lien has not expired. If a lien is filed within the time frame provided for under the Builders Lien Act the buyers liability is limited to the 7 per cent.

So the bottom line is that a buyer can buy a new condominium confident that they are not going to be responsible for a developer’s unpaid bills.

Richard Bell is a Vancouver lawyer who specializes in real estate, wills and estate planning, probate, and immigration law. He is the co-founder of Bell Alliance Lawyers & Notaries Public and has been named Best Real Estate Lawyer in Canada by Canadian Real Estate Magazine.
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