Part 1: The Construction Act – Proposed Changes to the Construction Lien Act

This is Part 1 of a continuing blog series on the proposed changes to the Construction Lien Act and generally, the enactment of Ontario’s new Construction Act.

Background

The Construction Lien Act (“CLA”), introduced in 1983, grants special protections to people involved in the construction industry. The CLA recognizes the special nature of the construction business.

This year, the Construction Act will come into force, ushering in a new era for the construction industry in Ontario with new rules and processes that the industry will have to get used to.

The New Rules and the Proposed Changes

Bill 142 was introduced in order to improve efficiency and competitiveness for construction businesses. Below is a discussion of a few of the key amendments that have been proposed.

1) Prompt Payment

A prompt payment regime has been proposed. Several jurisdictions throughout the world have enacted similar initiatives. The prompt payment provisions have prescribed timelines for payment to contractors and subcontractors. The proposed amendment is intended to speed up the payment process.

2) Special Adjudication

Currently, the only recourse that contractors and subcontractors have relating to improvements is with the courts. Bill 142 has introduced an interim, binding dispute resolution system, whereby any party can refer a dispute to a registered adjudicator during the course of a project. The proposed interim dispute resolution process provides quick decisions relating to disputes, which will minimize disruptions to projects.

3) Timelines Related to Liens

Bill 142 proposes extended preservation and perfection periods. Currently, a lien is only preserved if it is registered within 45 days. The amendments seek to extend the preservation period to 60 days. Under the present CLA, a lien claimant has 45 days to perfect the lien. Bill 142 seeks to extend the perfection period to 90 days from the last day on which the lien could have been preserved.

The Potential Effects

The prompt payment regime and new interim adjudication system will likely reduce time and money spent on litigation in the construction industry. This will hopefully translate to fewer disruptions in the course of a project.

Devry Smith Frank LLP is a full service law firm located in Don Mills. If you require representation or have any questions, please contact Devry Smith Frank LLP today. You may contact one of the many experienced lawyers on our website or call us directly at 416-449-1400.

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.”