Changes to Ontario’s Construction Lien Amendment Act Now in Effect
July 9, 2018
Amendments to the act include new prompt payment rules that will ensure Ontario construction businesses and workers get paid on time for the work they do. Late payment is a common problem in all sectors of the construction industry. Between 2002 and 2013, the average collection period in construction went up from approximately 57 to 71 days.
Key amendments came into force July 1. Additional amendments will come into force on October 1, 2019. These changes aim to modernize the lien and holdback process, help protect creditors and set out a new adjudication process to resolve payment disputes faster.
Among the changes now in effect:
• the deadline to preserve a lien has been extended from 45 to 60 days, from the triggering event for the expiry of liens
• the list of applicable triggering events now includes contract and subcontract “termination”
• the deadline to “perfect” a lien has been extended from 45 to 90 days after the last date that a lien could have been preserved
These changes allow more time for parties to negotiate and apply the act’s new interim adjudication process.
As of October 1, 2019,
• owners must pay the contractors within 28 days of receiving a proper invoice. If there is a dispute over the invoice, the owner must deliver a notice of non-payment to the contractor within 14 days. If only part of the proper invoice is disputed, the undisputed portion must be paid
• contractors who receive payment of a proper invoice must pay subcontractors that were included in the proper invoice within 7 days
• a process for resolving disputes quickly takes effect, in the form of interim adjudication until the Courts or an arbitrator release a decision, or the parties come to a written agreement. To ensure disputes are resolved in a timely fashion, the adjudication provisions have strict timelines. For instance, the adjudicator must release a written decision, with reasons, within 30 days of receiving documentation from the party that requested the adjudication. One party must make payment within 10 days after the decision is communicated. Interest would be applied to any late payments.
To find out more, read the Construction Lien Amendment Act, 2017: https://www.ontario.ca/laws/statute/S17024
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