An amendment to the regulations under the Emergency Management and Civil Protection Act (“Amendment”) was passed on Thursday night, lifting as of April 16, 2020, the suspension order, which as of March 16th, 2020, suspended the Construction Act’s lien preservation and perfection timelines. The broad wording of the Amendment regrettably did not address the impact of the previously imposed suspension during the hiatus period from and including March 16th, 2020 to April 16, 2020. However, the Attorney General issued a memorandum (“Memorandum”) prior to the release of the Amendment, which indicated that “the parties would have the same amount of time to meet a deadline that had been remaining before the suspension began on March 16th, 2020”. According to the Memorandum, it would appear that during the 31 day hiatus period from and including March 16th to and including April 15th (the “Maximum Suspension Period“), lien preservation/perfection periods may remain suspended and from and including April 16th there are no further suspensions.
The release of holdbacks for any lien expiring on or after April 15th may be extended for the full Maximum Suspension Period (i.e., 31 days) beyond its original expiry date. For example, if a lien preservation period was to expire on April 20, 2020 in the normal course, it may be deemed extended for the Maximum Suspension Period and may now expire on May 21, 2020.
This update is intended to apprise lenders of the possible interpretation of the Amendment as it applies to the release of holdback. However, until such time as there is absolute clarity as to the Amendment’s terms and intent, legal advice should be sought in each specific instance prior to release of any holdback.