By Catherine E. Willson, B.A., LL.B.
The Construction Act has received Royal assent. It is expected that the proclamations necessary to bring it into force will occur this spring. This is a radical departure from our Construction Lien Act, in effect for over 30 years. Changes important to the construction industry in the Construction Act include the following:
Construction liens – The time period for preserving a construction lien is extended from 45 days to 60 days. The time period for perfecting the lien (starting the court action) is extended from 45 days to 90 days.
A certificate of substantial performance must accurately set out the legal description of the property against which a construction lien may be registered, including the legal property description and PIN.
The amount required to be paid for security for costs to vacate a lien with the Court is being increased from $50,000 to $250,000, as in ‘the lesser of $250,000 or 25% of the lien’. This will often represent a significant increase in the amount an owner or general contractor must pay to vacate a lien from the property title.
Prompt payment – The Construction Act will require payers to adhere to timelines for amounts payable by owners to contractors, contractors to subcontractors, and subcontractors to subcontractors. If prompt payment timelines are ignored, interest will accrue at a specified rate and the trade can stop work if not paid following an adjudication.
Holdback – Holdback will no longer need to be retained in monetary funds. The Construction Act permits holdback to be retained in the form of a letter of credit, payment bond, and other forms of security.
Adjudication – Disputing parties will be able to refer the dispute for an immediate resolution. The adjudication may only address a single matter unless the parties and the adjudicator agree otherwise. The adjudicator will make a determination on the matter within 30 days of receipt of the documents. This represents a quick and painless method to adjudicate disputes. The parties have the opportunity to challenge the decision at a later date.
Summary procedure for lien actions – Leave of the Court will no longer be required for interlocutory motions in a lien action and the new Act permits the joinder of lien claims and trust claims. These changes and others streamline the procedure for court actions.
The above is only a sampling of the substantial changes being made in the new Construction Act. Some of these changes will be delayed until regulations and other requirements have been created.
In the weeks to come in later newsletters, we will drill down on some of these changes. Please feel free to contact any of the lawyers in the Construction department of GSNH LLP with any questions or comments.
This information deals with complex matters and may not apply to particular facts and circumstances. The information reflects laws and practices that are subject to change. For these reasons, this information should not be relied on as a substitute for specialized professional advice in connection with any particular matter.