Little-known provincial law forces N.S. couple to pay extra on garage bill
Published Monday, February 22, 2016 7:25PM AST
An obscure provincial law has resulted in a Halifax couple paying thousands of dollars extra on a garage they thought they had already paid for in full.
Sarah Griffin and Jason Formanger had a brand new garage built by a reputable contractor last year. After paying what they thought was their final installment, they were shocked to see another bill show up in November.
Griffin thought it was a mistake.
“Maybe the person who sent this didn't get our last payment (or) they're not aware we paid in full,” said Griffin. “Something's got to be amiss here, right?”
But it wasn't. The contractor had gone out of business, creditors were owed money, and the receiver was after them for 10 per cent of the value of garage – close to $4,000.
After doing some research, they found the details in a government law they'd never heard of.
“If they go bankrupt, we still owe money to the suppliers of the materials,” said Formanger. “We didn't know that we had to hold 10 per cent back."
The law falls under legislation called the Builder's Lien Act, which is regularly amended by the Nova Scotia government. It's meant to provide security for homeowners, but also contractors, sub-contractors and suppliers.
In a statement to CTV, the Nova Scotia Justice Department says the holdback applies to everyone in the “construction pyramid.”
The time period was bumped from 45 to 60 days in 2014.
“When things like this happen, it's bad for the industry and it's bad for homeowners as well,” said Sherry Donovan of the Nova Scotia Homebuilders’ Association.
Industry experts say the system isn't perfect, but it allows all parties to recoup some of their cash if someone runs into financial trouble.
“That's why this is in place – so that customers, homeowners and contractors can be protected," said Donovan.
Griffin and Formanger’s lawyer was able to get the bill reduced to $2,000. They’re warning potential customers to create a safety net for themselves.
“Get it in your contract to hold back 10 per cent for sure for 60 days,” said Griffin.
With files from CTV Atlantic’s Bruce Frisko.