Certificates of completion under the Builders Lien Act

By Tyler Galbraith, Partner, Jenkins Marzban Logan LLP

Certificates of completion under the Builders Lien Act trigger both the claim of lien filing and holdback periods for contractors and subcontractors. Accordingly, certificates of completion play an important role in the construction process but are often misunderstood or confused with other certificates (e.g. certificate of substantial performance). It is important, therefore, that all parties be familiar with their rights and obligations concerning certificates of completion.

The Builders Lien Act provides that on the request of a contractor or subcontractor, the payment certifier must, within 10 days of the request, determine whether the contract or subcontract has been completed and, if the payment certifier determines it has been completed, the payment certifier must issue a certificate of completion. If a certificate of completion is issued, the payment certifier must, among other things and within seven days, deliver a copy of the certificate to the owner, the head contractor (if any), and the person at whose request the certificate was issued and post, in a prominent place on the improvement, a notice of certification of completion. Accordingly, for a certificate of completion to be valid, it must be requested by the correct person, prepared by the correct person, prepared in the correct form (more or less) and properly issued.

Proper Request: A contractor should request the issuance of a certificate of completion from the payment certifier for its contract with the owner and a subcontractor should request the issuance of a certificate of completion from the payment certifier for its sub- contract with a contractor or other subcontractor. If the request comes from the wrong entity, it will not be properly made and the certificate of completion, if issued, will be invalid.

Proper Person: Under the Builders Lien Act the person responsible for issuing certificates of completion is the “payment certifier”. The payment certifier is either the person identified in the contract or subcontract as responsible for payment certification or, if no person is identified then (i) the owner acting alone is deemed the payment certifier in respect to amounts due to a contractor and (ii) the owner and contractor acting together are deemed the payment certifier in respect of amounts due to a subcontractor. Only the proper payment certifier can issue a valid certificate of completion. It is therefore recommended that the parties expressly identify in the contract or subcontract who the payment certifier is to avoid confusion and ensure requests are made to the proper person.

Proper Form: The Builders Lien Act provides that a certificate of completion “may” be in the prescribed form contained in the Builders Lien Act Forms Regulation, and if it is, it is sufficient for the purposes of the Act. A payment certifier should issue a certificate of completion in the prescribed form otherwise there is a risk the certificate of completion will be invalid because it does not contain the required information, which risk can be easily avoided.

Proper Issuance: The Builders Lien Act provides that if a payment certifier determines that a contract or subcontract is complete it must “issue” a certificate of completion. The Builders Lien

Act further provides that once a certificate of completion is “issued”, both the claim of lien filing and holdback periods are triggered. Unfortunately, the Builders Lien Act does not define what “issue” means; however, once a certificate of completion is issued it must be “delivered” and a notice of certification of completion “posted”.

The courts have held that there can be no effective notice where a certificate of completion does not contain the required information and a notice of certification of completion is not posted in a conspicuous location on the improvement. There must be a clear warning to those who may be affected by the issuance of a certificate of completion to make the process valid. In the circumstances, a payment certifier should meet its delivery and notice posting obligations to ensure that a certificate of completion is properly issued. It is recommended that the location on the improvement where notices of certification of completion will be posted be communicated (through some form of documentation) to ensure all parties know where to look.

Certificates of completion are well known in the construction industry but often misunderstood. The process for issuance, delivery and notification is set out in the Builders Lien Act but not always followed. The above ways to simplify the process in advance are recommended. However, it is up to the parties to know, understand, and follow the process to ensure certificates of completion are validly issued and enforceable. n

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