Construction businesses and workers in Ontario can look forward to being paid on time for the work they do under the province’s updated Construction Lien Amendment Act. The revamped legislation, which passed this week, will also set out a new adjudication process to resolve payment disputes faster, modernize the lien and holdback process and help protect creditors.
Late payment is a common problem in all sectors of the construction industry. Between 2002 and 2013, the average collection period in construction increased from about 57 to 71 days. In 2015, Bruce Reynolds and Sharon Vogel of Borden Ladner Gervais LLP undertook the first comprehensive review of Ontario’s construction laws, which hadn’t seen major updates in more than 34 years.
“I would like to thank the many organizations and individuals who lent their knowledge and expertise to this incredible effort,” said Attorney General Yasir Naqvi. “These changes will have a real impact on people’s lives, giving workers assurance they will be paid on time and in full, and help to ensure disputes are resolved quickly.”
Other amendments will ensure more time is provided for contractors and subcontractors to resolve their disputes outside of court by extending timelines to file liens and start court actions from 90 days to 150 days. Construction lien claims under $25,000 will be referred to small claims court. Contractors and subcontractors will also know when to expect full payment by requiring holdback funds to be paid as soon as the deadline to file a liens passes.
The law also protects subcontractors and workers if the general contractor files for bankruptcy by requiring surety bonding on public sector projects above a certain amount.
Another change is that condominium unit owners will be allowed to remove liens from their unit in relation to common elements, such as corridors and lobbies.
Stakeholders will have the opportunity to provide input before any changes take effect. Ontario’s next steps will be made available early in the New Year.