How to file a bogus lien

In many cases there will be no written renovation contract between homeowner and contractor, a serious oversight on the homeowner's part. But imagine you're the contractor. As in many  adversarial contractor-homeowner relationships, you probably behaved unprofessionally, produced sloppy work, stole, lied about your progress, and got fired. That's probably an accurate assumption, considering that about
80% of your peers are incompetent and/or dishonest. According to police in Halifax's Financial Fraud Unit, "some contractors will use liens as an intimidation tactic."

(In all fairness, it needs to be said that among the remaining 20% there are some very good renovation contractors - people who are good at their jobs and take integrity - not just honesty - with them wherever they go. They're probably happy to be taking the moral high road - there's a lot less traffic up there.)

But here's how you, as a member of the 80%, file a phony lien. Go to the Land Registration Office (Registry of Deeds), pay $100 and register the lien. You'll have to invent a few things like how much money you're pretending to be owed, what you supposedly did, and the last day you worked on your victim's home. You're supposed to do this within 60 days, so make sure you invent an appropriate day for the last day of work. (You don't need to be particularly fastidious about this - the LRO will apparently accept pretty much anything. When a judge gets around to looking at it two years later and throws the lien out because it's "confusing," say,  instead of "fraudulent," it doesn't say much for your ability to write coherently, or for the LRO's commitment to integrity.)

Next, you swear an affidavit that your information is true. Filing a lien which is knowingly fraudulent involves perjury. Lawyers like to say perjury applies to criminal matters, but when you lie in an affidavit in support of criminal or civil matters, that's perjury that can put you behind bars for up to 14 years. But perjury is hardly ever prosecuted in Canada, a perplexing situation which has caught the attention of more than one reporter - like this one. Still, some homeowners are getting really militant about this and there will be increasing pressure on police and prosecutors to do their job. In some provinces - Alberta, for example - filing a bogus lien is treated as a criminal offence and is investigated as an act of perjury. So far, the Nova Scotia justice system has shown little enthusiasm for chasing crooked contractors. That has to change.

Your next step is to inform the homeowner that you've registered a lien against his property. This is called for in the Lien Act, para 24A, but the Act also says its ok if you don't bother - para 24B. This little omission is technically an "irregularity" in legal terms. You'll probably want to avoid this disclosure anyway because the homeowner who meets you at the door will be inclined to hand you your head on a platter.

But homeowners should not assume that contractors are all bark and no bite. A contractor confronted with his transgressions is like any other cornered rat - he might turn on you, as happened to a Global TV crew.

If you, as contractor, want the lien to stick, you have to "enforce it." This involves starting a civil suit in the Supreme Court of Nova Scotia, and you'll probably need a lawyer to help you get that going. You may tack on additional issues - "breach of contract," for example. That's a particularly farcical move, considering that you probably have no respect for contracts to begin with, and shred, skew or sidestep them when you can. You must file a Statement of Claim with the court and also - for another $100 - file a "certificate of lis pendens" with the Land Registration Office. The lawsuit and lis pendens have to be in place within 105 days of your supposed last day of work.

As contractor, you should really think long and hard about whether you want to proceed beyond this point. Once this bit of fiction - the fraudulent lien - is inserted into the Supreme Court system, the legal bills can pile up  in a hurry. If you think you can handle this on your own, go for it.  Even with a lawyer, you're going to lose this case and you're not only going to be paying your legal bills, but some of the homeowner's as well.

Another issue for you to consider - once this elephant starts to move, you're pretty much stuck in the room with him. If you get cold feet at some point, you don't get to just walk away and forget about it. If you want to drop the claim, you have to go through some legal hurdles and the judge has to agree. However, if the homeowner - the defendant - has filed a counterclaim against you, he is under no obligation to drop his part of the action. Your days in court are over only when the homeowner and the judge are finished with you.

If you decide to proceed, you now do have to serve papers on the homeowner, advising him of the suit and the nature of the claim. This has to be done within 30 days of filing in Supreme Court. Don't forget to return the Affidavit of Service to the court, stating that you've actually delivered the paperwork to the homeowner. Again, if you're afraid of him you might want to get a process server to do this for you. Unlike the part about telling the homeowner that his home is under lien, this step is not optional. However, contractors can - and do - lie their way around the 30-day time limit. See "The Sins of the Contractors," below.

If the court action isn't started within 105 days, the homeowner's lawyer can get an order to remove the lien. However, it's entirely likely that the homeowner doesn't even know about the lien because you probably haven't told him, and the Land Registration Office isn't going to remove it until someone tells them to. Also, the LRO is not going to contact the homeowner to let him know what's happening. He'll find out eventually - maybe years later - when he tries to sell his house, or use it in a financial transaction of some sort, and he won't be able to because of the lien. The lien may be impotent, but the fact that it's on file at all is what buyers and lenders care about. He'll need to get a lawyer to investigate, find out that the lien hasn't been enforced, and get it off the title.

From here on in, it's just another civil lawsuit, with all the procedural convulsions that entails.
Along the way, you - as plaintiff and crooked contractor - may run into some problems. For example, you may be asked to demonstrate that you're going to be able to pay the homeowner's legal bills if you lose - and you will almost assuredly lose. If you can't pay, or won't pay based on your history - perhaps you have unsatisfied judgments against you - the court may direct you to post "Security for Costs." The amount involved is at the judge's discretion, and is typically between $1000 and $10,000, and you'll usually get anywhere from two weeks to two months to come up with the cash - or whatever asset the judge deems acceptable. If you can't or won't provide the security on or before the date specified, the suit can sometimes be quashed. It's entirely possible that the self-defended contractor will convince a judge to extend the specified date, and even allow the security to be paid in installments - well after the original "or else" date.

The homeowner will probably file a counterclaim against you for damages when he files a defense against your lien claim. If he's a high-priced professional who has to devote a lot of his time to dealing with you, he might try to recover the value of that time. Considering, too, that you are demonstrably mostly useless as a contractor, the homeowner will have brought in a real renovation contractor to clean up after you and finish the job. Most or all of the cost of the remedial activity will be in the counterclaim, as will the homeowner's living expenses and a multitude of other costs.

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