Prompt Payment Lien Legislation on its Way
By James McTague
Reynolds Mirth Richards Farmer LLP
AMSC Casual Legal Service Provider
The Provincial Government of Alberta has recently introduced Bill 37: The Builders’ Lien (Prompt Payment) Amendment Act, 2020 (the “Bill”). The Bill proposes a multitude of changes to the current Builders’ Lien Act, which has been in place since 2000.
The Bill introduces changes throughout the current act; however, the most notable changes are the introduction of a prompt payment regimen and formal adjudication process, which appears to be structured similar to the legislation in other Canadian provinces, including Saskatchewan and Ontario.
The changes proposed by Bill 37 can be divided into 3 categories:
Lien Registration Rules
The timeline to register a lien will be extended from the original 45 day period to 60 days from when the contract is completed or abandoned. The timeline for liens associated with the improvements to oil and gas will remain unchanged from the 90 day period from when the contract is completed or abandoned. A new category of liens is created for improvements related to the furnishing of concrete or work done in relation to concrete. The period for registering these concrete related liens will be 90 days.
In addition to new timelines, Bill 37 also increases the minimum lien amount from $300.00 to $700.00 and expands the group of parties who will have access to information pertaining to the contracts and payments made on a project.
Prompt Payment Rules
The Bill prohibits ‘pay when paid’ provisions in a contract, which create a circumstance in which a contractor can withhold payment to subcontractors until the contractor receives payment from the project owner.
The Bill also impacts the content of invoices and when payments are prescribed. A ‘proper invoice’ must specifically include a statement that the invoice is intended to constitute a proper invoice. An owner, contract, or subcontractor must comply with a payment deadline of 28 days from the date of receipt of the invoice, any disputes about the invoice must be initiated within 14 days, and interest will be applicable on overdue amounts at a rate prescribed in the regulations.
Dispute adjudication process
Disputes about liens will no longer be commenced only by way of Statement of Claim in the Alberta Court of Queen’s Bench. The Bill sets out an adjudication process to address construction disputes outside of the Courts. The details of the adjudication process have not been released, as they will be prescribed through regulation. The scope of matters which will be decided by the adjudication process is currently unknown. The Bill indicates an adjudicator’s decision is to be final and binding. Parties could apply for judicial review of an adjudicator’s decision on limited specific grounds.
If Bill 37 is passed, municipalities will have to familiarize themselves with the notable changes to the previous longstanding builders lien legislation.
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