Construction Legislation Changes: What You Need To Know

Bill 142, the Construction Lien Act Amendment Act, 2017 (“the Act”), received Royal Assent on December 12, 2017 and is now law.

The Act is expected to receive Royal Proclamation in early 2018. The major changes to the Ontario construction law regime will not therefore come into force until proclamation is received.

New Construction Act Changes

The core aspects of the new legislation include modernizing the lien/holdback regime, introducing a prompt payment regime, and introducing an adjudication mechanism. A few important details are as follows:

• The Act changes the timelines for preservation of construction liens from forty-five (45) days to ninety (90) days.

• The Act introduces a prompt payment regime.
  • Owner to Contractor: upon receipt of a “proper invoice” as defined in the legislation, payment is to be made under the proper invoice no later than 28 days after receipt, subject to the giving of a notice of non-payment.
  • Contractor to Subcontractor: a contractor who receives full payment of a proper invoice within the time specified shall, no later than seven days after receiving payment, pay each subcontractor who supplied services or materials that were included in the proper invoice.

• • If entitlement to payment is disputed, the Act includes provisions for the giving of notices of non-payment, the timing of the notice, and incorporates provisions for partial payment, etc.

• The Act  implements a new adjudication process for disputes.
  • The Act introduces new legislation for the referral to adjudication disputes with other parties respecting any of the following matters:

• • • the valuation of services or materials provided under the contract;
    • payment under the contract, including in respect of a change order, whether approved or not, or a proposed change order;
    • disputes that are the subject of notices of non-payment;
    • amounts retained for set-off claims;
    • non-payment of holdback;
    • any other matter that the parties to the adjudication agree.

• • The adjudication regime is proposed to provide effective and timely interim dispute resolution to issues on the job site and prevent the burden of extensive litigation following the completion of the project.

The legislation is more complicated and intricate than the simplified excerpts included above. The amendments are substantial and will impact construction projects and lien rights throughout the province.

Contact one of Brown Beattie O’Donovan’s construction lawyers today to find out more about the changes to the construction legislation and how it will directly impact you and your company.