Introduction
Can a builder's lien be substituted with security?
In other words, can an employer evict a builder who is
exercising a lien over a site by providing security, say in the
form of a bank guarantee, to cover the contractor's claim which
is the subject matter of the lien?
The Supreme Court of Appeal (SCA) had to deal with this issue
recently1 albeit not in the context of a construction
contract. Nonetheless, the Court reviewed the law and stated the
relevant principles.
Liens
There are two types of lien.
Firstly there is the debtor/creditor lien which arises out of a
contract between the parties and extends to cover all expenditure
which the lien holder has incurred on the other party's
property. The lien holder may retain the property as against the
other party, but not against third parties who have rights in the
property, until the lien holder has been paid the contract price.
This type of lien does not exist apart from the contract.
