Legal

November 12, 2025 Published by Golden Horseshoe Chapter - By Jeremy Nixon, Sam Zucci

Prompt Payment, Proper Invoices, and the Construction Act – Oh My!

From the Volume 25, Fall 2025 issue of the CCI GHC Condo News Magazine

It has been some time since the Construction Act (the “Act”) came into effect, replacing the former Construction Lien Act. In many ways, not much has changed, yet in others, everything has changed.

The changges to the Act came into effect in two phases, with the first on July 1, 2018, affecting holdbacks, liens, trusts, and bonding. The second phase, and focus of this piece, regarding prompt payment came into effect on October 1, 2019.

History

The prompt payment provisions in the Act were part of a wide-ranging series of revisions. One of the underlying goals was to keep payments flowing down the construction pyramid—that is, from Owner to Contractor, from Contractor to subcontractors, and so on to suppliers and other subcontractors. Included in these changes were the Prompt Payment provisions, which govern how parties are to deliver invoices and when payments are to be made on those invoices.

A Crucial Stipulation

A significant administrative and philosophical change that has not yet significantly permeated the Condominium industry is that any provision in a contract that provides an invoice is payable only if the Owner or a Consultant has certified the payment has no effect. What!?!

During a recent conversation with a property manager, we asked how and when they go about paying Contractor invoices. Their response was both predictable, yet alarming—‘We wait until the Engineer has certified payment.’

As we have just learned, a clause in a contract that states invoices are payable only once they’re certified by a Consultant has no effect. Before long, if not already, someone is going to get caught off guard, or worse. However, before we get too wound up, let us examine Prompt Payment Provisions in more detail.

Prompt Payment Provisions

The Act was amended to add a new Part titled “Prompt Payment.” Briefly, it sets out requirements for “Proper Invoices,” and details the definition, payment regime, and timelines that apply to them.

What is a Proper Invoice?

A Proper Invoice is defined as any invoice that lists the following information:

1. The Contractor’s name and address;
2. The date of the invoice and the period of time during which services or materials were supplied;
3. Information identifying the contract (e.g., a contract number or a purchase order number);
4. A description, including quantity where appropriate, of the services or materials that were supplied;
5. The amount payable for the services/materials supplied, and the payment terms;
6. The name, title, mailing address and telephone number of the person to whom payment is to be sent; and
7. Any other prescribed information—this is a catch-all intended to refer to, for example, specifications regarding invoicing in the contract or other laws and regulations that govern specific types of invoices.

If an invoice is missing any of this information, it is not a Proper Invoice. Take note that confirmation by a consultant or “certification” of values, quantities, etc. are not technically part of a Proper Invoice. By law, these types of provision are not valid and of no force or effect—and this isn’t a right by the Contractor that can be waived. Don’t worry, there is still mechanism to revise values.

While not yet in effect, further changes regarding classification of Proper Invoices are coming down the pipe: changes to the Act have been passed—but not yet implemented—which would make it so that any invoice that is missing the information provided above is still deemed to be a Proper Invoice unless the owner notifies the Contractor in writing of (i) any deficiencies in the invoice and (ii) what changes are required to correct the invoice.

In other words, at some point in the future, if the Owner receives an invoice from a Contractor that is missing, for example, payment information or the address of the Contractor, the Owner has seven calendar days to let the Contractor know what is missing. After seven days, the deficient invoice is still treated as a Proper Invoice.

In essence, a Proper Invoice is more of an administrative process.

What do I do with a Proper Invoice?

The Act provides that Proper Invoices shall be delivered on a monthly basis unless the contract directs otherwise. The Owner must pay any Proper Invoice within 28 days of receipt (subject to the dispute provisions discussed below). The Owner is still obligated to follow holdback requirements. Again, any provision in the contract that provides an invoice is payable only if the Owner or a Consultant has certified the payment has no effect.

If the Owner (or Consultant on behalf of the Owner) disputes the amount claimed in the invoice, they have 14 days from delivery of the Proper Invoice to deliver a Notice of Dispute. This is a formal document (referred to as Form 1.1 under the Act); it directs that the Owner needs to specify the amount not being paid and the reasons for non-payment. Even if a Notice of Dispute is delivered, the Owner is still obligated to pay any outstanding non-disputed amount—if there is any such amount—by the 28-day deadline.

From a practical perspective, many Consultant-Contractor relationships have a developed rapport whereby quantities and values are often reviewed in ‘draft’ and effectively agreed upon prior to formal submission of invoicing. It may frequently result that these provisions have little effect from a traditional “certification” process as the timeframes are already routinely being achieved. However, that does not mean such rapport overrides the Act.

What Happens if the Owner Doesn’t Pay?

Failure to pay either the entire Proper Invoice or pursuant to a Notice of Dispute entitles the Contractor to commence the adjudication regime under the Act, which we will not get into here. However, it essentially outlines a process whereby disputes on projects are quickly adjudicated.

What Happens if the Contractor Doesn’t Pay?

These requirements are replicated and modified for invoices rendered by subtrades to Contractors, subcontractors to other subcontractors, and for invoices rendered by suppliers.

Summary

Given this information, the Prompt Payment regime works as follows:

• Day 1: The Contractor delivers an invoice, which should be reviewed in order to confirm whether it constitutes a Proper Invoice;
• Day 14: The deadline to deliver a Form 1.1/Notice of Dispute to the Contractor outlining the amount the Owner refuses to pay and on what basis;
• Day 28: Payment of the Proper Invoice amount or, if the Owner has issued a Notice of Dispute, the undisputed amount is due.

At some point in the future, there will be another step at Day 7, which will be the deadline to advise the Contractor in writing that its invoice is not a Proper Invoice, and on what basis, failing which the invoice is deemed to be a Proper Invoice.

Challenges

Many Owners (or their Management companies) have well established systems, procedures, and policies regarding receiving and processing payments, most of which do not begin to churn until receipt of some sort of payment “certification”. We now know that while certification no longer legally has bearing on payment timelines, it nonetheless remains the most prevalent trigger in most cases.

We expect that some may find it challenging to achieve the payment timelines or presently be unable to meet them at all without change. While Consultants can certainly make adjustments to provide Owners with as early notification as possible, it will largely be up to the Owners to follow the Act. Like in most things, communication between parties will be key.

For now, Contractors that service the Condominium space largely do not seem to understand or grasp these provisions well enough to press them. Even those that do and may want to, are often hesitant as they tend to highly value relationships, future opportunities, etc. They may be reluctant to “rock the boat” for fear of missing out. These conversations have more to do with business operations and client relations—but they have no direct bearing on their rights under the Act.

For Contractors that do push their rights—which we expect will become increasingly common—more often than not they have Owners dead to rights. Owners and Property Managers had best start making adjustments lest they find themselves on the wrong side of the equation.

---

Jeremy Nixon, P.Eng., BSS is the Vice President at Brown & Beattie Ltd., a building science engineering firm dedicated to providing clear and sensible building improvement, maintenance, and repair planning advice by listening to clients’ objectives. Mr. Nixon is licensed with Professional Engineers Ontario (PEO) and holds a Building Science Specialist (BSS) designation.

Sam Zucchi, is an Associate with Shibley Righton LLP specializing in construction litigation.