What is a BLA Trust
Per section 10 of the Builders Lien Act, SBC 1997, c 45 (the “Act”), money received by a contractor or subcontractor on account of the price of the contract or subcontract constitutes a trust fund for the benefit of persons engaged in connection with the improvement by that contractor or subcontractor, and the contractor or subcontractor is the trustee of the fund.
Until all of the beneficiaries of the fund are paid, a contractor or subcontractor must not appropriate any part of the fund to that person’s own use or to a use not authorized by the trust.
The trust fund provisions do not apply to money received by an architect, engineer or material supplier.
Why is there a Trust
Ensuring that the funds flowing between parties within the construction scheme are not diverted and used for unrelated purposes is one of the key goals of the Act. Both owners and subcontractors (or others near the end of the line) are particularly vulnerable to those in the middle, essentially left hoping the funds are properly distributed. Establishing that those funds are trust funds helps with the ability to seek recourse against an offending party.
Who is responsible for the Trust
In short, any contractor or subcontractor below the owner can be responsible for ensuring that funds are properly distributed.
If you have concerns about properly distributing funds in relation to a construction project, consult a lawyer.
What if a Trust Fund was not (properly) maintained
A contractor or subcontractor commits an offence if that person appropriates or converts any part of a fund in contravention of the Act. They may be liable to a fine of not more than $10,000 or to imprisonment for a term of not more than 2 years, or both.
If a contractor or subcontractor is a corporation, a director or officer of the corporation who knowingly assents to or acquiesces in such an offence by the corporation commits the offence in addition to the corporation, and may be personally liable for the misuse of trust funds.
When to consider a claim regarding Trust Funds
A court claim by a beneficiary or against a trustee of a trust created under the Act must be commenced within one year after the head contract is completed, abandoned, or terminated, or the improvement is completed or abandoned.
If you have concerns that funds in relation to a construction project have not been properly distributed, consult a lawyer.
