prompt payment legislation

Alberta introduces prompt payment legislation

The proposed changes to the Builders’ Lien Act are the first in 20 years
Thursday, October 22, 2020

New legislation will introduce prompt payment timelines into Alberta’s construction sector, ensuring contractors and subcontractors get paid on time.

The proposed changes to the Builders’ Lien Act are the first in almost 20 years and address long-standing concerns within the construction industry, including payment timelines, lien periods and adjudication.

“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,” said Nate Glubish, Minister of Service Alberta.

The proposed legislation would:

  • Eliminate the need for contracted timelines by requiring owners, contractors and subcontractors to pay invoices within 28 days.
  • Extend the deadline for unpaid contractors and subcontractors to file liens against a project with the government’s Land Titles Office from 45 days to 60 days.
  • Prohibit ‘pay-when-paid’ clauses from construction contracts to end the practice of transferring financial risk to subcontractors.
  • Establish an adjudication system to resolve disputes, rather than rely on the courts.
  • Increasing the minimum amount owed that can be subject to a lien from $300 to $700.
  • New rules allowing for holdback money on large, multi-year projects to be released without risk at pre-set times.
  • Improving contractors’ access to payment information.
  • Changing the name of the act from the Builders’ Lien Act to the Prompt Payment and Construction Lien Act.

Previously, Alberta had no rules for payment timelines in the construction industry, which meant these timelines were vague if not addressed in a contract. If passed, these changes will set a clear timeline of 28 days for payments to be received, giving construction industry professionals the confidence they need to operate successfully.

The legislation is welcomed and supported by major industry groups, including the Alberta Construction Association, Calgary Women in Construction, Building Trades of Alberta, Alberta Trade Contractors Coalition, Concrete Alberta, the Alberta Roofing Contractors Association and the Electrical Contractors Association of Alberta.

“Members of the Alberta Construction Association support legislated payment cycles and adjudication of payment disputes. These mechanisms help timely completion of construction projects, ensure our employees are not impacted by payment delays and provide better value for taxpayers on public infrastructure projects,” said Frederick Vine, chair, Alberta Construction Association.

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