The Equitable Doctrine of Marshalling Applies to Construction Liens


The Construction Lien Act seems to be a world unto itself, unaffected by the general principles of law. But the recent decision of the Alberta Queen's Bench reminds us that a construction lien is one form of secured interest. The lien is therefore subject to the general principles of the law of mortgages and secured interest. The court held that a construction lien is subject to the age-old equitable principle of marshalling. This principle can be of great help to lien holders seeking to recover value from a highly mortgaged property.

There are other long-standing principles that may substantially affect priorities of lien holders. Marshalling and apportionment are just two of those principles.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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