On October 21, 2020, the Government of Alberta announced the introduction of new legislation that will establish timelines and rules for payments and liens in all construction industry sectors, thus ensuring that contractors and subcontractors are paid on time.
Bill 37: Builders’ Lien (Prompt Payment) Amendment Act, 2020 is intended to give construction industry professionals the confidence they need to operate successfully.
If Bill 37 is passed, the existing Builders’ Lien Act will be renamed as the Prompt Payment and Construction Lien Act.
Previously, Alberta had no rules for payment timelines in the construction industry, which meant these timelines could be vague if they were not otherwise addressed in a contract.
Changes to Existing Legislation
The Alberta government has explained some of the key changes to be introduced by Bill 37’s amendments to existing legislation, including:
- setting a 28-day timeline for owners, contractors and subcontractors to pay invoices;
- prohibiting ‘pay-when-paid’ clauses in construction contracts,
- ‘pay-when-paid’ clauses allow contractors to withhold payment from their subcontractors until the contractor is paid, unfairly placing the risk of non-payment onto subcontractors;
- extending timelines for registering liens:
- construction industry: from 45 days to 60 days,
- concrete industry: from 45 days to 90 days;
- increasing the minimum amount owed that can be subject to a lien from $300 to $700;
- allowing dispute resolution through adjudication, which is faster and less costly than going to court;
- introducing new rules allowing holdback money on large, multi-year projects to be released without risk at pre-set times; and
- improving subcontractors’ access to payment information.
Purpose and Response
Explaining the purpose of the proposed changes, the current Minister of Service Alberta, Nate Glubish, stated:
“We are answering calls and addressing concerns from the construction industry to protect jobs by ensuring everyone throughout the supply chain – from general contractors to subcontractors – is paid on time for their work. We’re doing this at a critical time when Alberta’s government is moving forward on its recovery plan and when hard-working Albertans in construction can least afford payment uncertainty.”
The changes have been well-received by leaders in the construction industry, with the founder of Calgary Women in Construction, Elaine Coates, stating:
“Calgary Women in Construction recognizes that this type of legislation is critical, especially in these times, for ensuring the viability of the powerful construction industry in this province; especially for small to medium-sized business, as well as individual subcontractors. An updated and improved Builders’ Lien Act, especially one addressing prompt payment, has been missing far too long.”
If passed, Bill 37 will take effect on proclamation.
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The knowledgeable Calgary construction lawyers and staff at DBH Law understand the complex risks of both multimillion-dollar and smaller construction projects and the expensive disputes that can arise when something goes wrong in all cases. We handle all elements of a construction relationship. We can proactively advise and help draft important documents such as contractor and subcontractor agreements and similar, to make expectations clear and eliminate as much risk as possible. We can also represent you in any litigation or other dispute resolution that may be needed if a dispute arises.
The team of professional and experienced construction lawyers at DBH Law have the experience and technical knowledge to provide you with the legal advice needed in the modern construction industry. We understand the number of moving pieces involved in construction projects and work tirelessly to resolve issues quickly. Contact us online or by phone at 403.252.9937 to discover how we can help you today.