Every family that builds a home in Vancouver pays a builder in stages, and BC law asks you to keep part of each payment in your hands for a while. That part is the holdback. It protects the people who actually build your home, and it protects you from paying for the same work twice.
In this post we walk you through the holdback in plain words, using the text of BC's Builders Lien Act, which BC Laws shows as current to September 22, 2026. We explain what a lien is, who can file one, how much you keep back and for how long, when the money must sit in its own account, and how a lien is filed and removed at the Land Title Office. We mention the holdback briefly in our posts on contract types and paying for a multiplex. This post gives it the full space it needs. It explains the law in general. For your own contract, talk to a lawyer who works in construction law.
What Is a Builders Lien?
A lien is a claim against your property for money that is owed. Under section 2 of the Act, a person who does work or supplies material for your project, and is not paid, has a lien for the unpaid part of the price. The lien attaches to your interest in the home, the home itself, the land it sits on, and the material delivered to the site.
The LTSA, which runs BC's land title system, describes a claim of builders lien on its filing page as "an interest registered on a title to secure payment for labour or materials." Once it is on your title, anyone who searches the title, such as a buyer, a lender or your own lawyer, will see it.
The Act calls your project an "improvement." The word covers anything built, altered, repaired or added on the land, and also clearing, excavating, filling and grading. So a lien can come from the excavation crew in the first week as easily as from the painter in the last.
Who Can File a Lien on Your Home
A Vancouver build has many people working in layers. You hire a contractor. The contractor hires subcontractors, such as the framer, the electrician and the plumber. Each of them has workers, and each buys material from suppliers. The Act gives most of these people a lien:
- Contractors. A person you hire directly to do work or supply material. If one contractor is hired to do almost all of the work, the Act calls it the "head contractor."
- Subcontractors. A person hired by a contractor or by another subcontractor.
- Workers. An individual paid wages for work on the project.
- Material suppliers. A contractor or subcontractor who supplies only material. Under the Act, "material" includes equipment rented without an operator.
- Architects and engineers. Their services count as "work" under the Act's definitions.
There is one limit. Section 2(2) says a person who works for, or supplies, an architect, an engineer or a material supplier has no lien. Section 17 adds that a claim of lien cannot be filed for less than $200.
The Holdback: 10 Percent of Every Payment
Section 4(1) sets the main rule. The person who pays on each contract, and on each subcontract, under which a lien may arise must keep back a holdback equal to 10 percent of the greater of:
- the value of the work or material actually provided under the contract, and
- the amount of any payment made on the contract price.
Section 4(2) says this applies whether the contract pays in stages or in one payment at the end. So if your Vancouver custom home has a draw schedule, you keep back 10 percent at every draw.
The rule applies at every level. You keep 10 percent back from your contractor. Your contractor keeps 10 percent back from its subcontractors, and they do the same with their own subcontractors. Section 4(6) lists the people who are paid in full with no holdback: workers, material suppliers, architects and engineers.
Section 4(9) explains why this matters. Each holdback is charged with payment of everyone hired under the person it was kept from. In plain words, the money you keep back from your contractor is there to pay the trades and workers your contractor hired, if your contractor does not pay them.
If a savings institution, such as a bank or a credit union, holds your construction mortgage and you authorize it to pay out the loan money, section 4(4) lets the lender keep the holdback for you. When it does, the law treats you as having kept it yourself.
The Holdback Account: When the Money Needs Its Own Account
Keeping the money back is the first step. Section 5 says where it goes. The owner must:
- Open an Account. Open a holdback account at a savings institution for each contract under which a lien may arise.
- Pay the Holdback In. Deposit the amount you are required to keep back under section 4.
- Run It Together. Administer the account together with the contractor the holdback was kept from.
Section 5(8) sets out when the account is not required. The main case for a family is a contract where the total value of work and material is less than $100,000. If your contract is worth more, plan for the account from the first payment. The account is also not required when a savings institution lender keeps the holdback for you under section 4(4).
The money in the account is trust money. Section 5(2) says it is charged with payment of the liens arising under your contractor, held in trust for that contractor, and cannot be paid out without the agreement of everyone who runs the account. Section 13(4) says money in a holdback account cannot be garnished. Unless you agree otherwise, the interest belongs to you during the holdback period and to the contractor after it, under section 5(6).
Section 5(7) gives the contractor a remedy if the owner does not deposit the holdback. It counts as a default under the contract, and the contractor may stop work on 10 days' notice for as long as the default continues. So a missed deposit can stop your project.
How Long You Keep It: The 55-Day Holdback Period
The holdback period decides when you can release the money. Section 8 sets it in two ways.
- With a Certificate of Completion. If a certificate of completion is issued for a contract or subcontract, the holdback period for it ends 55 days after the certificate is issued.
- Without a Certificate. If you hired a head contractor, the period ends 55 days after the head contract is completed, abandoned or terminated. If you did not, it ends 55 days after the project itself is completed or abandoned.
Each word in that list has its own meaning in the Act.
Completed
Section 1 says a contract counts as "completed" before every last item is finished, and section 1(2) gives the test in numbers. A contract meets the test when the remaining work can be finished or corrected for no more than 3 percent of the first $500,000 of the contract price, 2 percent of the next $500,000, and 1 percent of the rest. Section 1(3) adds that a project is completed when it, or a main part of it, is ready for use or is being used as intended.
A Strata Lot in a Multiplex
For a strata multiplex, section 1(4) sets a firm date. The construction of a strata lot counts as completed, and its contract as performed, no later than the date the strata lot is first occupied. If a family moves into the ground floor home of your multiplex, that home counts as completed from that day, even while work goes on upstairs.
Abandoned and Terminated
Section 1(5) says a contract or project is treated as abandoned after 30 days with no work, unless the stop was caused by a strike, lockout, sickness, weather, holidays, a court order, a shortage of material or a similar cause. Terminated means the contract was ended.
The Certificate of Completion
Section 7 explains the certificate. It is issued by the "payment certifier": the architect, engineer or other person the contract names for that job, or, if the contract names nobody, the owner. When a contractor or subcontractor asks for one, the payment certifier must decide within 10 days whether the work is complete and, if it is, issue the certificate. Within 7 days after that, the certifier must send copies and post a notice of certification of completion in a place on the site where people will see it. A subcontractor can ask for a certificate for its own part of the work. This lets the trades who finish early, such as the excavator or the framer, be paid their holdback before the whole home is done.
Releasing the Money
Section 8(4) says you may pay the holdback after the period ends. Once you do, the liens of the person you paid, and of everyone hired under them, are discharged, unless a claim of lien was filed or a court action to enforce a lien was started in the meantime. So before you release a holdback, have your lawyer search your title.
What Happens If You Do Not Keep the Holdback
Section 34 sets the most an owner can be made to pay to all the lien holders who claim under one contractor. The limit is the greater of what you still owe that contractor and the holdback you were required to keep.
Here is what that means for a family. Say you paid your contractor every dollar on time and kept nothing back. Then the contractor fails to pay the drywall subcontractor, who files a lien. You owe the contractor nothing more, but the required holdback is still counted. The subcontractor may still recover up to that 10 percent from your property, so you may pay that part of the work twice. If you had kept the holdback, that money would already be set aside for this.
Section 34(2) adds two more rules. A payment made to a contractor in bad faith does not reduce what you owe. A payment made after a lien is filed, when you know about it and it is still on title, does not reduce what you owe either, to the amount of that lien.
Section 6 adds one more rule. If your contractor defaults, you cannot use the required holdback to finish the work or to pay your damages until no more liens can arise under that contractor. Money you hold above the required holdback can be used to fix a default, under section 34(3).
Contract Money Is Trust Money Too
The holdback is one part of the protection for the trades. Section 10 adds a second part. Money a contractor or subcontractor receives on the contract price is a trust fund for the people it hired on the project, and the contractor is the trustee. Until those people are paid, the contractor must not use the money for its own purposes.
Section 11 makes breaking this trust an offence. The fine can be up to $10,000, the prison term up to 2 years, or both, and a director or officer of a company who knowingly agrees to the breach commits the offence too. Under section 14, an action about this trust must be started within one year after the head contract is completed, abandoned or terminated.
How a Lien Is Filed at the Land Title Office
Section 15 says a claim of lien is made by filing it at the land title office in the prescribed form. The registrar then notes it on the title. The LTSA's filing page gives the practical steps as of October 2026:
- The claimant needs the property's parcel identifier, a short description of the work, who has not paid, the amount owing and when it was due, and an address for service.
- Filing online uses the BC Services Card app, and the LTSA says registration "can be completed within 2 business days."
- By mail or in person, the LTSA says registration typically takes 10 to 15 business days.
- The LTSA says, "It is free to file a Claim of Builders Lien application."
- The LTSA also says filing "does not guarantee payment," and the claimant must enforce the lien if the debt is not settled.
The 45-Day Filing Deadline
Section 20 sets the deadline. A claim of lien must be filed no later than 45 days after a certificate of completion is issued for that contract or subcontract. Without a certificate, the 45 days run from when the head contract is completed, abandoned or terminated, or from when the project is completed or abandoned. Section 22 says a lien that is not filed on time is extinguished.
Compare the two numbers. Trades have 45 days to file. You keep the holdback for 55 days. The extra 10 days give you time to check your title before you pay.
Section 21 says a filed lien takes effect from the time the work began or the first material was supplied. Section 32 says a registered mortgage taken in good faith ranks ahead of a lien, except that a mortgage advance that raises the loan after the lien is filed ranks behind that lien. Ask your lender what it does with the next draw if a lien is filed on your project.
How Long a Lien Lasts and How It Is Removed
Under section 33, a lien claimant must start a court action and register a certificate of pending litigation within one year of filing the lien. If not, the lien is extinguished. You do not have to wait the full year: section 33(2) lets the owner serve a notice to commence an action, and the claimant then has 21 days.
The Act and the LTSA give several ways to remove a lien from your title:
- Pay the Money Into Court. For liens filed by people your contractor hired, section 23 lets the owner apply to pay into court the lesser of the claims filed and the amount owing to the person the liens come through, as long as that amount is at least the required holdback. The payment discharges you from those claims, and the court orders the liens removed from title.
- Give Security. Section 24 lets you ask the court to cancel the lien when you give security for the claim. The court may accept security for less than the full claim.
- Cancel an Ended Lien. Section 25 lets the court or the registrar cancel a lien that is extinguished, dismissed, discontinued or paid. The court can also cancel one that does not relate to your land, or that is vexatious or an abuse of process.
- Remove It After a Year. The LTSA's owner page says that if no legal proceedings are taken within one year, the lien can be removed with a Form 17 marked "Claim of Builders Lien by Effluxion of Time."
- Remove It After Payment. The same page says that when payment is received or a settlement is reached, the lien is cancelled with a Form C under the Land Title Act.
The Act also protects you from a claim that should not have been filed. Section 19 makes a person who files a lien against land it does not attach to liable for the owner's costs and damages. Section 45 makes it an offence to knowingly file a lien with a false statement.
Practical Tips for Your Build
Put the Holdback in the Contract. BC Housing's hiring guide lists holdbacks among the parts every contract should cover, and names a builder who will not discuss holdbacks as a warning sign. Section 42(2) of the Act says an agreement that the Act does not apply is void, so a clause like that has no effect.
Ask Your Lender Who Holds It. If your construction loan comes from a bank or credit union, ask in writing whether it will keep the holdback under section 4(4), or whether you must open the account yourself.
Open the Account Before the First Draw. On a contract of $100,000 or more, set up the holdback account with your contractor at the start, so each deposit goes in with its payment.
Keep Every Certificate and Notice. Each certificate of completion starts its own 55-day period. Keep a list of the date of each one, and of the date each part of a multiplex was first occupied.
Use Your Right to Information. Section 41(2) lets the owner ask the contractor in writing for the terms and state of accounts of its subcontracts. The contractor must answer within 10 days, and if it does not, you may hold back further payments until it does.
Search Title Before You Release. Before you pay out a holdback, ask your lawyer to search your title for liens and check that no action has been started.
If You Sell Units, Plan for Liens. Section 35 limits what lien claimants can recover from a buyer in good faith to 10 percent of the purchase price, for liens filed after the latest of three dates: the buyer's interest being accepted for registration, the head contract being completed, abandoned or terminated, and, where there is no head contractor, the project being completed or abandoned. Ask your lawyer how this applies before you sell a multiplex unit.
How Our Team Handles Payments
By Costar's own account on our process page, in the pre-construction stage Costar and the client "agree on a cost plus arrangement for transparency," set a budget, sign a written contract, and track progress and expenses in CoConstruct software. When every cost and every payment is recorded by stage, the amounts the holdback is based on are easy to check, for you, your lender and your lawyer.
Our project gallery lists We Killarney Townhomes, a six-plex at 2333 E 54th Ave in Vancouver, with pre-design, permit and construction management in its scope. On a building like that, each home can reach completion on its own date, so the holdback dates are worth writing down from the first day.
The one step we suggest this week: before you sign with any builder, ask how the holdback will be kept on your project, who holds the account, and who will issue the certificates of completion. Then take the contract to a construction lawyer. When you are ready to plan your Vancouver home or multiplex, our team is happy to walk you through how payments work at each stage. Tell us about your project today.
Related on this site: Custom home building in Metro Vancouver · Multiplex construction in Vancouver · Building in Vancouver · Book a one-hour project consultation
