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The Minister of Service Alberta, Nate Glubish, recently introduced Bill 37, Builders’ Lien (Prompt Payment) Amendment Act. If passed, it would substantially amend Alberta’s Builders’ Lien Act.
Here is a summary of the proposed changes. It should be remembered that, if passed, they will only apply to contracts entered into after Bill 37 comes into force, which we expect will be sometime next spring.
Timeline for Registering Liens
The proposed changes will change the timeline to register many liens:
- There will be a new category of “improvements primarily related to the furnishing of concrete as a material or work done in relation to concrete”. (It is unclear how this definition will apply in practice.) For these projects, the time for registering a lien will be 90 days.
- The time to register a lien for improvements to oil and gas is unchanged: 90 days from when the contract is completed or abandoned.
- For all other projects, the time for registering a lien will be extended to 60 days from when the contract is completed or abandoned.
Bill 37 introduces a prompt payment process, which would change the timing of payments on many construction projects.
Bill 37 introduces the notion of a “proper invoice”. As defined, a “proper invoice” must include specific information, including a statement that the invoice is intended to constitute a proper invoice.
An owner, contractor, or subcontractor must then pay money owing under a proper invoice no later than 28 days after receiving it. If a party disputes the amount, they can refuse to pay only if they give notice of the disputed amount and the reason within 14 days. It will no longer be permitted to require certification of work or prior approval before an invoice can be issued.
Further, “pay-when-paid” clauses will no longer have any force or effect. A contractor will be obliged to pay a subcontractor, even if the contractor has not been paid.
The progressive release of holdback rules is also being simplified.
Bill 37 introduces an adjudication process to simplify the resolution of disputes. The form and processes are not yet known; rather, many of the elements will be set out in the regulations which have not yet been released. What is known is this:
- Adjudicators will be appointed by a “Nominating Authority”, to be designated by the Minister.
- Only parties to a contract or subcontract will be able to use the adjudication process to resolve a dispute relating to that contract.
- The specific kinds or types of matters which may be decided by adjudication have yet to be determined and will be set out in the upcoming regulations.
- Likewise, the adjudication procedures have yet to be determined and will also be set out in the regulations.
- A decision by an adjudicator will be final and binding. However, parties will be able to apply to the courts for judicial review of the adjudicator’s decision on certain specified grounds.
These are other proposed changes in Bill 37:
- The name of the Builders’ Lien Act will be changed to the Prompt Payment and Construction Lien Act.
- More parties will have a right to information on the status of contracts and payments made on a project. A lienholder, beneficiary of a trust, or contractor or subcontractor (if working under a contract for an owner, contractor or subcontractor), may, at any reasonable time, demand the production for inspection of the contract and state of accounts.
- The minimum claim amount to register a lien will be increased from $300 to $700.
Our team will continue to monitor the status of Bill 37. As more information becomes available, we will provide it. And when the time comes, we will offer education and assistance to help you adapt to the new legislation.
If you have any questions about the proposed amendments or how they could apply to you, reach out to the authors of this post or any member of our Construction Law Team.