Construction Lien Changes

new development

As you may have heard, the first round of amendments to the Construction Lien Act are scheduled to come into force on July 1, 2018. The purpose of this post is to provide a brief overview of some of the key changes as they may relate to condominium projects.

For starters, the Construction Lien Act will be known as the Construction Act. The amendments will not apply to all situations, including contracts entered into before July 1, 2018 (even if subcontracts were entered into after July 1, 2018) or the procurement process was commenced before July 1, 2018. There are other exceptions. 

Holdbacks

One of the most significant changes has to do with the release of statutory holdbacks. The owner must publish a non-payment of holdback notice within 40 days of publication of the certificate of substantial performance so the contractors and trades have the opportunity to lien before the expiry of the lien period.  The amendments make release of the funds mandatory if the non-payment form is not published within the 40 day period.  There are also some amendments related to the release of holdbacks based on the completion of a phase or annually where certain conditions are met. These amendments will be particularly useful for larger projects that may take several years or phases to complete.

Liens & Other Amendments

The amendments will give contractors and trades more time to complete the lien process. The lien period will increase from 45 days to 60 days and the time to perfect the lien will increase from 45 days to 90 days. These amendments are welcome by contractors/trades and their lawyers alike. There is nothing like scrambling to register liens on the last possible day to protect a client’s interests.

There are also several amendments to the definitions in the Act, including of “improvement” and “price”. The formula for determining substantial performance has also changed, as have obligations in relation to trust funds. There are also significant changes related to alternate financing and procurement projects for large complex public infrastructure projects.

Still to Come

The more significant amendments to the Act, including a new quick payment scheme and mandatory adjudication system, will come into force in the Fall of 2019.

Don’t forget to check our condominium development blog over the next few months as we post about the changes coming to the construction industry this year and next.