Legal

July 30, 2021 Published by South Alberta Chapter - By Spencer Chimuk

What you need to know about Changes to the Builders’ Lien Act

From the Summer 2021 issue of the CCI South Alberta CCI Review

For the first time in decades, Alberta is making major updates to its builders’ lien legislation. This new legislation will have a dramatic impact on all construction projects in Alberta, including new condominium construction, and maintenance and renovation work. The most important changes for property managers and condominium owners to understand is the impact of this legislation on the registration of builders’ liens and the timelines for payments to contractors and subcontractors.

Builders’ liens exist to protect a contractor or subcontractor who provides labour or materials and does not get paid. A lien allows the contractor or subcontractor who was not paid to register a claim, in the form of a lien, on the property they worked on. Bill 37 was created in response to concerns raised by the construction industry and addresses both the delay in payment and delay in dispute resolution for the industry. The new act will apply to contracts entered into after Bill 37 is proclaimed, which is expected to happen in Fall 2021.

There are a number of major changes to the Builders’ Lien Act, including a name change to the Prompt Payment and Construction Lien Act. Unfortunately the changes are too vast and varied for us to outline in a single article. In part one of our series on amendments to the Builders’ Lien Act we highlight a few of the more significant changes.

Prompt Payment and a New Adjudication Process

Bill 37 introduces “prompt payment” provisions which create mandatory payment timelines. The payment timelines are based on the issuance of a “proper invoice”, which is written request for payment which must include the following information: (i) contractor’s name and business address, (ii) the date of the proper invoice and the period during which work was done or materials were provided, (iii) information identifying the authority (such as the contract) under which the work was done or materials provided, (iv) a description of the work done or materials provided, (v) the amount requested for payment and the payment terms, (vi) the name, title and contact information of the person to whom payment is to be sent, (vii) a statement indicating that the invoice is intended to be a “proper invoice” and (viii) any other information prescribed by the regulations.

Owners will have 28 days after receiving a proper invoice to pay contractors, unless they dispute the amount within 14 days. The payment timelines tie into the introduction of a new system of adjudicating disputes. Under the new act, the government will introduce a Nominating Authority which nominates adjudicators. This adjudication system will allow parties to resolve disputes without having to go to court, which is usually expensive and takes a long time to reach a resolution. I’m sure many of you remember the amendment to the Condominium Property Act, and how we had the Act long before the Regulations so didn’t know the details. The same is the case here. Many of the specifics of the adjudication process will be in the Regulations which have yet to be announced.

Increased time to register a lien

The timeline to register a lien will be increased from 45 days to 60 days. Bill 37 also creates a new category for work done in relation to concrete. The timeline for registering a lien in this category will be 90 days, to account for the longer time it takes to allow concrete to cure.

Moving forward

Bill 37 is going to have a dramatic impact on the construction industry. The changes to the administration of payments, liens and holdbacks and dispute resolution is going to impact day to day operations and management of all construction projects in Alberta, big and small. There will also be a trickle-down effect from the new act that will impact how projects are financed and funded. This new act is going to create major changes for businesses and other stakeholders, including condominium corporations, who are regularly doing maintenance, repair and renovation work.

While some of the exact details of this new legislation are not yet known, it is important for all owners and property managers to understand how this statute will impact management of all condominium projects moving forward. For further information about this or other issue relating to Condominium living, please contact the author or any member of the McLeod Law LLP Condominium Group and we’d be happy to help.

This new act is going to create major changes for businesses and other stakeholders, including condominium corporations, who are regularly doing maintenance, repair and renovation work.