Docstoc

12. LEIN OVER UNFIXED PLANT AND MATERIALS

Document Sample
12. LEIN OVER UNFIXED PLANT AND MATERIALS Powered By Docstoc
					                             LEIN OVER UNFIXED PLANT AND MATERIALS



The claimant’s right to exercise a lien
When a progress payment under a construction contract becomes due and payable, the claimant is
entitled to exercise a lien in respect of the unpaid amount over any unfixed plant or materials that
the claimant has supplied for use in connection with carrying out construction work for the
respondent.
The claimant retains ownership of the unfixed plant or materials until the respondent pays any
outstanding progress payment that is due.
This right is set out at section 12A of the Building and Construction Industry Security of Payment Act
2002.

What is a lien?
A lien is a form of security over property where one party retains ownership of the property as
security for the performance of an obligation by the other party. A lien can only apply to property
which is physically transferable, for example, unfixed goods and materials.

To which property does the lien apply?
The claimant is entitled to exercise the lien if a progress payment under the contract has not been
paid by the due date.
The claimant must serve a Notice of Lien on the respondent in a particular form. The form is
prescribed in the Building and Construction Industry Security of Payment Regulations 2003.
A link to the regulation is on the Building Commission’s website.

What is the effect of the lien?
Upon receiving the Notice of Lien, the respondent is not entitled to fix, remove, sell or otherwise deal
with the unfixed plant or materials identified in the Notice until the claimant receives the
outstanding progress payment.
The claimant becomes a secured creditor. This means that the unfixed plant or materials will not be
available for payment of unsecured creditors in any distribution of assets by an external
administrator
The lien does not give the claimant any right against any third party who is or has become the owner
of the unfixed plant or materials.

When does the lien cease?
The lien in respect of the unpaid amount is extinguished when the claimant receives the progress
payment.

How to serve the Notice of Lien
The Notice of Lien can be served in any of the following ways:
           Deliver it in person. It is served when respondent receives it.
           Lodge it during normal business hours at the respondent’s ordinary place of business. It
            is served when it is received at that address.
           Send it by post to the respondent’s ordinary place of business. It is served two business
            days after the date on which it is posted.
           Fax it to the respondent’s ordinary place of business. It is served at the time it is
            received, unless it is received after 4pm. If it is received after 4pm, it is taken to have
            been served on the next business day.
           Provide it in any other manner specified in the contract.

Legal advice
This Fact Sheet is provided for general guidance only and must not be regarded as legal advice.
Before exercising a lien, the claimant is advised to seek legal advice.

Related fact sheet
                     Fact Sheet No. 11: If the respondent doesn’t pay

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:4
posted:2/13/2012
language:
pages:2