It has been over 20 years since there have been any significant changes to the Builders’ Lien Act[1]. However, at the end of August, Alberta will follow in the footsteps of Ontario and Saskatchewan with the introduction of the Prompt Payment and Construction Lien Act (the “PPCLA”).
The Builders Lien (Prompt Payment) Amendment Act, which was introduced by Service Alberta in late 2020, will come into force on August 29, 2022, changing much more than the name of the Builders’ Lien Act to the PPCLA. It will also extend the lien period, establish statutory payment terms for those throughout the construction industry and, more significantly, introduce a prompt payment and an adjudication regime designed to fast track the resolution of payment and payment related disputes.
Who does the Prompt Payment and Construction Lien Act Apply to?
The PPCLA has a wide reach. It applies to anyone performing work, furnishing services, goods or materials, with respect to an improvement in land; including registered professionals who provide consulting services. It also applies to all construction sectors, including residential home builders, condominium developments, and commercial and industrial construction – regardless of the size of project.
What are the Key Changes to the Existing Provisions of the Builders’ Lien Act?
A persons’ ability to register a builders’ lien is not affected by the new prompt payment and adjudication legislation. The right to register a builders’ lien continues to exist independently from the obligations of prompt payment. The PPCLA has made some key changes to the existing provisions of the Builders’ Lien Act, the first being the extension of the lien period from 45 days to 60 days for those in the construction industry and a carve-out for contracts primarily related to the supply of work and services in relation to concrete. The lien period for concrete related work and services will be 90 days.
In addition to changes with the lien period, the PPCLA will expand the application of section 33 of the Builders’ Lien Act to provide better access to information and will change the release of holdback to allow for an annual or phased release on longer projects.
What is Prompt Payment all about?
The heart of the PPCLA is the introduction of a new prompt payment and adjudication regime. Which leads to the question: what is prompt payment all about?
While prompt payment does not guarantee payment for work on a construction project any more than when parties relied on contractual payment terms, what it does do is impose statutory requirements on the timing of invoicing and payment.
The triggering event is the submission of a “Proper Invoice”, as defined in the PPCLA, by the Contractor to the Owner. In a scenario where there is no dispute regarding payment, the Owner has 28 days to remit payment of the invoice to the Contractor, then as you move down the contractual hierarchy, each tier has 7 days from receipt of payment to remit payment to those parties it contracted with.
What if there is a dispute?
If there is a dispute about payment, then the Owner must provide a Notice of Dispute to the Contractor, in the form proscribed by the Regulations, within 14 days of receipt of the Proper Invoice. Within 7 days of receipt of a Notice of Dispute from the Owner, the Contractor may issue a Notice of Non Payment to all or some of its Subcontractors in the form proscribed by the Regulations. This process applies down the contractual chain when a dispute arises. A Notice of Dispute or Notice of Non Payment requires the payment dispute to be referred to Adjudication within 21 days.
[1] Builders’ Lien Act, RSA 2000, c B-7.
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Want to learn more?
Join presenters W. Donald Goodfellow QC and Adrianna Worman for LESA’s Builders’ Liens program on October 5 to hear more about the PPCLA and the prompt payment and adjudication process. Consider the coming changes and their impact on your practice as well as discuss topics such as the creation of a lien, limitations of a lien, the lien fund, and more. This program is offered as an in-person program in Edmonton as well as online via livestream.
Date: October 5, 2022
Edmonton Venue: LESA’s Program Space | Suite 1401, 10088-102 Avenue
Time: 9:00 AM – 4:30 PM
Price: $445 + GST
Registration is available for Edmonton here and for the livestream here.
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Guest Author: Adrianna Worman, Goodfellow & Schuettlaw
Adrianna’s practice focuses on the areas of construction dispute resolution and construction litigation, including builders’ lien matters, construction bonds, disputes that arise during construction such as scope and schedule changes, payment disputes and delay claims. She has extensive experience in contract review and development.
For a decade, Adrianna has built a successful career at Goodfellow Schuettlaw representing owners, general contractors, subcontractors and suppliers. Read more
