What is a Worker’s Lien?
Worker’s Liens can be used by workers, contractors and sub-contractors to secure payment for monies owed. However, as this article will explain, they can be relatively complicated and there are a number of procedural steps which must be strictly followed in order for a lien to be effective and enforceable.
In South Australia the law that governs worker’s liens is the Worker’s Liens Act 1983 (SA) (“the Act”). The Act works alongside the Building and Construction Industry Security of Payment Act 2009, and together the two acts of legislation provide for security of payment for construction contractors in South Australia.
Similar to a caveat, a lien under the Act is a registerable interest in land that is specifically available to workers, contractors or sub-contractors enabling them to secure payment for their wages, the materials they manufactured to either be used for building works or for the building works they have performed to date. The worker, contractor or sub-contractor can register a lien over the property where the work was undertaken.
There are two parties to a worker’s lien. The lienor is the person who registers the lien over a property, with the lienee being the person whose property is subject to the lien.
Upon valid registration at Land Services SA, a worker’s lien acts to restrict the owner of the property from carrying out future dealings with that property. This includes the owner being prevented from refinancing, selling, leasing or otherwise dealing with the property until such time as they either satisfy the amount owed or alternatively reach an agreement as to the removal of the lien.
Types of Worker’s Lien Under the Act
There are three types of worker’s liens listed under the Act, they are as follows:
- Worker’s lien
- Liens of contractors
- Liens of sub-contractors
Worker’s Lien (Limited to wages and the manufacture of materials)
A worker who is doing work for either the owner or occupier of a property, or for a contractor or sub-contractor for the benefit of the owner or occupier is entitled under certain circumstances to register a lien for his or her wages. However, this type of lien is limited to a claim that does not exceed $200 (which in a modern context is a rather minimal amount).
A worker is entitled to register a lien for his or her wages where they have completed work on a property with the consent of the owner or occupier of that land. A worker may also place a lien over a property for the manufacture of materials which were either intended to be or have been used for work done with the property owner or occupier’s consent. It is important to note that consent does not have to be expressly provided. Implied consent is sufficient to enable a lien to be registered over a property.
Lien of Contractor or Sub-Contractor (Scope of contract works)
A contractor or sub-contractor can register a lien over a property up to the value of the contract price for works which have been completed, provided the owner or occupier has consented to the works. Again, both express and implied consent are sufficient for a lien of a contractor or sub-contractor to be lodged over a property.
Priority of Liens
Under the Act worker’s liens for wages are accorded the highest priority. Sub-contractors’ liens come next which are then followed by contractors’ liens.
Can I Lodge a Lien?
To lodge a lien over a property one must have reasonable grounds to do so and must not do so frivolously. A lien can be lodged by a worker, a contractor, or a sub-contractor. However, there are certain exclusions which may limit when a lien can be lodged, for example a lien is unable to be lodged over land that is owned by the Crown.
How Is It Lodged?
To lodge a lien, a registerable form must be filled out and submitted at Land Services SA. A filing fee is also required to be paid when registering a lien. The details to be provided in the form are set out below:
- The name, address, and occupation of the lienor
- The name and address of the lienee
- A description of the land over which the lien is claimed
- The amount claimed by the lienor
- Whether the claim is made either as a worker, contractor or sub-contractor
- A statement that the work in respect of which the lien is sought was done with the consent of the owner or occupier
- The court in which the action to enforce the lien is to be lodged.
There are also strict time restrictions placed on a proposed lienor. A lien is required to be registered within 28 days from when the wages or contract price became due.
How Long Does a Lien Remain on a Property For & How Are They Extinguished?
A lien will remain on a property until such time as either:
- The lienor renounces legal action
- A court order is made in favour of the lienee
- Legal action is resolved, and the lien is withdrawn at the Land Titles Office
- The lienee deposits the sum of money they owe to the Court in which the matter is to be heard as security and this subsequently relieves them and the property from the burden of the lien.
Further, a lien is automatically removed from a property if, after 14 days of it being registered, no action has been brought against the owner or occupier of the property enforcing it. This means that to enforce a lien, legal proceedings must be brought by the lienor against the lienee within 14 days.
What To Do If You Have to Deal with a Lien?
As has been discussed in this article, dealing with liens can be complicated and they can have costly consequences if not dealt with correctly or in a timely manner. Legal advice should be sought as soon as practicable if you have any queries or disputes relating to liens.
Eckermann Lawyers is a property and commercial law firm that specialises in dealing with liens. If you would like more information or advice on how to best deal with a lien, please contact our office.
