Prompt Payment FAQs
What is the Prompt Payment and Construction Lien Act?
The Alberta Builders’ Lien Act has been amended and renamed the Prompt Payment and Construction Lien Act. There are two new corresponding regulations, the Prompt Payment and Adjudication Regulation and the Prompt Payment and Construction Lien Forms Regulation.
When do the changes come into effect?
August 29, 2022.
Who will be bound by the new legislation?
Anyone performing work, providing services or supplying materials for an improvement to land. This includes individuals, corporations, and municipalities. However, the new legislation will not apply to:
- Public works as defined in the Public Works Act;
- Agreements to finance and undertake an improvement if one of the parties is:
- The Crown in right of Alberta; or
- A provincial corporation as defined in the Financial Administration Act that is an agent of the Crown in right of Alberta.
What types of contracts are bound by the new legislation?
All contracts and subcontracts, whether written or oral, in which one or both parties are performing work, providing services, or supplying materials for an improvement to land (subject to the exceptions noted above).
Can I contract out of the time periods set out in the legislation
No. Any agreement that the legislation does not apply or that legislative remedies are not available will be deemed void.
What is a proper invoice?
The new legislation introduces the concept of a “proper invoice”. A proper invoice is a written bill or request for payment for work done or materials furnished for an improvement which meets the requirements in the contract, and contains the following information:
- Contractor’s name and business address;
- Date of proper invoice and period work was done or materials were furnished;
- Identification of the authority under which the work was done or materials furnished;
- Description of the work done or materials furnished;
- Amount requested for payment with break-down of all work and/or materials;
- Name, title and contact information of the person to be paid; and
- A statement indicating it is intended to be a proper invoice.
Who issues the proper invoice?
A contractor is required to issue a proper invoice to the owner at least every 31 days, unless the contract includes a provision for the testing and commissioning of the improvement, work done, or materials provided under the contract, and the conditions of testing and commissioning are not met.
Can the issuing of a proper invoice be conditional on prior certification or approval?
No, any provision in a contract that makes giving a proper invoice conditional on prior certification of a person or prior approval of the owner to give the invoice is of no force or effect.
Can a contract specify payment will be made to a subcontractor after payment is received from the owner?
No, the new timelines do not allow for conditions to be added to payment. Payment must be made in accordance with the legislation.
Have the lien periods changed?
Yes, the new standard lien period is now 60 days.
Under the new adjudication process, what can be adjudicated?
Adjudication is available to resolve the valuation of service or materials, payment (including a written or proposed change order), non-payment, payment or non-payment of a lien fund, or any other matter that the parties agree to adjudicate.
How does the adjudication process work?
See our Adjudication Process page for Flowchart and Checklist, and our Adjudication Webinar for more information.
Will these changes affect ongoing projects?
The existing Builders’ Lien Act will apply to contracts entered into before August 29, 2022, and the new Prompt Payment and Construction Lien Act will apply to contracts entered into on or after August 29, 2022. This could result in different lien period and holdback periods for contract and subcontracts on the same project. We recommend discussing potential future issues with a member of our Construction Team.
