Prompt Payment and Construction Lien Act comes into effect

via Gowling WLG (Canada) LLP

As you know the Prompt Payment and Construction Lien Act comes into effect today. It is important to know if the new legislation – prompt payment, extended builders’ lien periods, and adjudication process – applies to you and the project that you are involved in.

Here are the transitionary provisions of the new legislation:

1. Anyone who is performing work, providing services, or furnishing goods or materials with respect to an improvement in land must comply with the new legislation;
2. The new legislation does not apply to Public Works projects, P3’s with the Government of Alberta, Federal Government projects, or operations and maintenance work that does not involve an improvement to the project lands;
3. The new legislation applies to municipal, county and regional district projects undertaken in Alberta;
4. The new legislation applies equally to owners including home builders, architects and professional engineers who are registered as professionals and providing consulting services to an improvement, contractors, subcontractors and suppliers;
5. The new legislation will apply to your contract regardless of the type of contracting approach or model, or payment process that is being used;
6. The new legislation applies to suppliers even if they are located outside of Alberta as long their product is being used in an improvement in Alberta;
7. The new legislative provisions apply to contracts between an owner and a contractor entered into on or after August 29, 2022;
8. The new legislation will apply to subcontracts and supply agreements based upon the date of the contract between the owner and the contractor – NOT the date of that the subcontract or supply agreement is entered into between the subcontractor and the contractor or the supplier or the contractor – so you will need to know the date of the prime contract to know if the new legislation applies to your subcontract or supplier agreement;
9. The provisions of the old Builders’ Lien Act will continue to apply if the prime contract was entered into before August 29, 2022 even if a subcontract or supply agreement is entered after August 29, 2022; and

If the duration of the contract between the owner and the contractor exceeds two years from August 29, 2022, after two years the new legislation will apply to the contract, and the contract terms, including all subcontracts and supply agreements, must be revised to comply with the new legislation.

We hope that this reminder helps you understand whether or not the new legislation applies to your contract, subcontractor or supplier agreement.

We are equally hopeful that the new legislation provides an opportunity for our industry to adapt to a consistent and reliable payment process and avoid unwanted and costly conflict over payment issues, so that the industry can do what it does best – build for the future of Alberta.