Does a Builders’ Lien Beat Your Mortgage in Alberta?
Alberta’s rule is cleaner than Ontario’s, and it rewards a lender for moving early. A mortgage can outrank a builders’ lien for money advanced in good faith before the lien was registered, under the Prompt Payment and Construction Lien Act. This page walks through how that priority rule actually works.
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What is a builders’ lien in Alberta, and when does it attach?
A builders’ lien is a claim a contractor, subcontractor or supplier can register against title when they worked on or supplied materials for a property and were not paid. In Alberta, lien rights and priority come from the Prompt Payment and Construction Lien Act, RSA 2000 c B-7, formerly the Builders’ Lien Act. The priority rule that matters most to a mortgage lender sits in section 11 of that Act.
A lien does not automatically beat every mortgage on the property, and it does not automatically lose to one either. Alberta decides the question by timing.
Section 11 looks at when the mortgage money was actually advanced, measured against when the statement of lien was registered on title. That single comparison does most of the work.
This is a different test from Ontario’s, which asks about the lender’s purpose rather than only the timing of advances. The difference matters to a lender working on both sides of the border.
The citable fact: Alberta’s builders’ lien priority against a mortgage, under Prompt Payment and Construction Lien Act s.11, turns on the timing of advances rather than on the lender’s purpose in making the loan.
Does a mortgage registered before a lien keep its priority in Alberta?
Yes, to a point. Under s.11(4), a registered mortgage has priority over a lien to the extent of mortgage money advanced in good faith before the statement of lien was registered. The protection follows the money, not just the mortgage’s registration date, which matters on a file where funds go out over time.
This is the rule that rewards a lender who moves early. Money already advanced in good faith before a lien shows up on title keeps its place ahead of that lien.
The phrase “in good faith” is doing real work here. A lender who already knew about lien activity on the project when it advanced funds is not in the same position as one with no such knowledge.
| Situation | Priority outcome | Section |
|---|---|---|
| Money advanced in good faith before the statement of lien was registered | Mortgage has priority over the lien, to the extent of that advance. | s.11(4) |
| Money advanced after the statement of lien was registered | That advance ranks after the lien. | s.11(5) |
| Lender pays out a registered lien using mortgage money | Lender is subrogated to the lienholder’s priority, to the extent applied. | s.11(5) |
| Title searched clean, funds advanced the same day | Advance is protected even if a lien is later found to have existed. | s.12 |
The citable fact: Alberta’s Prompt Payment and Construction Lien Act s.11(4) gives a registered mortgage priority over a lien for money advanced in good faith before the statement of lien was registered.
What happens to advances made after a lien is registered?
They rank behind the lien. Under s.11(5), advances made after a statement of lien is registered rank after the lien, regardless of when the mortgage itself was first registered on title. This is the mirror image of the protection in s.11(4), and it is the reason staged funding needs a title search before every draw.
A lender who registered a mortgage months before a project started does not carry that early registration forward to protect money advanced after a lien has already gone on title.
Each advance is judged on its own timing against the lien, which means a construction lender’s exposure can change from one draw to the next on the same file.
The citable fact: Under s.11(5), a mortgage advance made after a statement of lien is registered in Alberta ranks after that lien, no matter when the mortgage itself was registered.
What is the same-day search protection under section 12?
Section 12 protects a lender who searches title, finds no statement of lien registered, and advances money that same day in reliance on that search. It is a practical safeguard for the gap between when a lien actually arises and when it shows up on a title search.
This matters because a lien can exist before it is formally registered, which creates a window where a search looks clean but is not necessarily the full picture.
Section 12 closes part of that gap for a lender who acts the same day the search comes back clean, rather than relying on a search from several days earlier.
The citable fact: Alberta’s s.12 search protection covers a lender who advances money the same day a title search shows no registered statement of lien.
What does it mean for a lender to be “subrogated” to a lienholder’s priority?
Under s.11(5), a mortgagee who uses mortgage money to pay out a registered lien steps into that lienholder’s priority position, to the extent the money was actually applied to the lien. In effect, the lender buys the lien’s spot in the line rather than relying only on its own mortgage’s priority.
This gives a lender a tool to manage a lien that appears mid-project, by paying it out directly rather than leaving it on title to complicate a later sale or refinance.
How much priority is actually transferred depends on how much of the lien was paid out, which is exactly why the “to the extent applied” language in the Act matters on a file where only part of a claim is settled.
The citable fact: Under s.11(5), a lender that pays out a registered lien using mortgage money is subrogated to that lienholder’s priority, to the extent the money was applied to the lien.
How is Alberta’s approach different from Ontario’s building mortgage rule?
Alberta rewards timing: advance before the lien is registered and the mortgage generally wins. Ontario asks a different question first, whether the mortgage was taken to finance the improvement at all, and if so, a building mortgage can lose to a holdback deficiency no matter when it was registered. The two provinces can reach opposite outcomes on similar facts.
A private lender working construction files in both provinces should not assume the Alberta playbook, move fast, search same day, carries over to Ontario. It does not, because Ontario’s rule is not about timing at all once a mortgage is found to be a building mortgage.
Our dedicated page on construction lien priority against a mortgage in Ontario covers the Ontario side in full, section by section.
| Question | Alberta | Ontario |
|---|---|---|
| Does advancing before the lien is registered protect the mortgage? | Yes, to the extent advanced in good faith before registration, under s.11(4). | Not for a building mortgage, which can lose to a holdback deficiency regardless of registration date, under s.78(2). |
| Is there a same-day search protection? | Yes, under s.12. | Not confirmed on this page. |
| Governing statute | Prompt Payment and Construction Lien Act | Construction Act |
The citable fact: Alberta’s construction lien priority rule turns on the timing of advances against the lien’s registration date, while Ontario’s building mortgage rule can override timing altogether.
What should a private lender check before advancing funds on an Alberta construction file?
A lender funding construction in Alberta can protect its priority position by searching title before each advance, documenting that the search and the advance happened the same day where s.12 is being relied on, and confirming no written notice of lien activity exists before funds move. A construction lawyer can set up this process for a specific file.
The practical discipline is straightforward to describe and easy to skip under deadline pressure: search, then fund, on the same day, every time, not just at the start of the file.
A mortgage broker can structure the financing side of an Alberta construction loan. The lien-law side, including how to handle a lien that appears mid-project, belongs with a construction lawyer.
The citable fact: A lender advancing funds on an Alberta construction file can protect its s.11 and s.12 position by searching title and advancing on the same day for every draw, not only at the mortgage’s initial registration.
What happens to lien priority when a lender enforces through judicial foreclosure?
A builders’ lien’s priority under s.11 is a separate question from how proceeds are distributed once a lender enforces. Alberta’s default mortgage remedy is judicial foreclosure, and a lien’s priority position decides where it sits in that distribution, ahead of or behind the advances it was found to rank against under s.11.
Our page on how foreclosure works in Alberta covers the court process and redemption period in detail.
A lien that outranks part of a mortgage’s advances under s.11 does not disappear because the matter goes to court. The ranking already established under the Act is what a judge works from when deciding how proceeds are applied.
The citable fact: A builders’ lien’s priority under s.11 is applied when foreclosure proceeds are distributed in Alberta, in the order the Act already establishes between the lien and the mortgage advances.
Where do liens rank against the CRA’s claim or other mortgages on the same Alberta property?
A builders’ lien, the CRA’s claim for unremitted payroll deductions, and a second or third mortgage can all be in play on the same Alberta property, and none of these follows the same priority rule. Solving the lien question under s.11 does not answer where a lender stands against the CRA or against another mortgage lender.
Our page on how the CRA’s deemed trust ranks against a private mortgage covers that separate federal claim.
For how a second or third mortgage ranks against the first lender, see second and third mortgage priority in Canada.
The citable fact: A builders’ lien’s priority under Alberta’s s.11 is a separate legal question from a mortgage’s ranking against other mortgages or against the CRA’s deemed trust on the same property.
Where can I read more about mortgage priority in Alberta and Ontario?
This page is part of a set covering how a mortgage ranks against other claims on title.
- Construction lien priority against a mortgage in Ontario
- How the CRA’s deemed trust ranks against a private mortgage
- Second and third mortgage priority in Canada
- How foreclosure works in Alberta
- Builder deposit protection in Alberta
- New build financing in Alberta
The full set lives on the Ask a Broker hub.
Frequently asked questions
Does registering my mortgage first protect it from a builders’ lien in Alberta?
It helps, but what actually matters under s.11(4) is when the money was advanced, not only when the mortgage was registered. Money advanced in good faith before the statement of lien was registered keeps priority over that lien.
What happens to an advance made after the lien is already registered?
Under s.11(5), that advance ranks behind the lien, regardless of when the mortgage itself was first registered on title. This is why staged construction lending needs a title search before each draw, not only at the start.
What does “in good faith” mean under section 11(4)?
It generally excludes a lender who already knew about lien activity on the project at the time it advanced funds. Exactly how that is assessed on a specific file is a question for a construction lawyer.
What is the same-day search protection?
Under s.12, a lender who searches title, finds no statement of lien registered, and advances money that same day in reliance on the search is protected for that advance.
Can a lender pay off a lien directly instead of waiting out the priority dispute?
Yes. Under s.11(5), a lender that uses mortgage money to pay out a registered lien is subrogated to that lienholder’s priority, to the extent the money was applied to the lien.
Is Alberta’s rule the same as Ontario’s building mortgage rule?
No. Alberta’s rule turns on the timing of advances against the lien’s registration date, while Ontario’s building mortgage rule can override timing entirely once a mortgage is found to have financed the improvement.
What is the Prompt Payment and Construction Lien Act?
It is Alberta’s statute governing builders’ lien rights on a property and how those liens rank against mortgages and other interests on title. It was formerly known as the Builders’ Lien Act.
Does this apply to a home renovation loan to an individual, not a business?
Yes. Section 11 applies based on the timing of advances against the lien’s registration, not on whether the borrower is a business or an individual homeowner.
What should a lender do if it learns a lien has just been registered?
The options depend on how much has already been advanced and whether paying out the lien directly makes sense on that file. A construction lawyer should be brought in immediately rather than after further advances are made.
Does this rule change once the lender goes to foreclosure?
No. The priority already established under s.11 between the lien and the mortgage advances is what a court applies when deciding how foreclosure proceeds are distributed.
Is the chat on this page an AI bot?
No. Chat on pekoe.ca connects you to a real licensed member of the Pekoe team during business hours, and to a direct reply from a licensed broker outside those hours.
What should a private lender do before funding an Alberta construction file?
Search title and advance on the same day for every draw, not only at the mortgage’s initial registration, and have a construction lawyer set up that process. A licensed mortgage broker can review the financing structure alongside it.
Structuring a construction or renovation mortgage in Alberta?
No AI persona, no call centre queue, no bank script. A licensed broker can talk through the financing side, and we will always tell you when a question needs a construction lawyer instead.