Canada: It's Finally Here! Ontario Reforms The Construction Lien Act

In 1983, Ontario introduced the Construction Lien Act to the construction industry. It was the new law that many in the industry loved to hate. Now, after 34 years, the Act is undergoing its biggest change, and it is in many ways a sea change.

On May 31st 2017, new legislation, Bill 142, Construction Lien Amendment Act, 2017 (the Amendment Act) was introduced at Queens Park with the goal of modernizing the Construction Lien Act, introducing a mandatory prompt payment regime, and implementing a mandatory fast-track dispute resolution process. The Construction Lien Act regulates how payments are made, to help ensure that workers who have provided services or materials during a construction project are paid for their work.

The amendments to the Construction Lien Act (which will now become the Construction Act) represents the materialization of the Province's intention to modernize provincial construction laws to improve efficiency and competitiveness for construction businesses. This new legislation will bring significant changes: not only a mandatory prompt payment regime and adjudication of construction disputes, but changes to lien rights and to the holdbacks, changes to summary procedures, updating the definition of substantial performance and completion, changes to the trust provisions, and many other changes.

Here are some of the key takeaways and highlights:

Prompt Payment Regime (s. 7 of the Amendment Act)

  • Bill 142 introduces a strict, prompt payment regime in Ontario. It will be applied to both private and public sector projects down the contract stream, triggered by delivery of a proper invoice.
  • The owner will have 28 days to pay a contractor after delivery of a proper invoice.
  • A contractor will have 7 days to pay a sub-contractor, but only after being paid.
  • Prompt payment will be mandatory and you will not be able to freely contract out of the prompt payment provisions, but will be permitted to establish milestones or other payment structures that are not monthly.
  • The owner and general contractor will be able to agree on some details for the submittal of an invoice but if they do not agree, they will be required to submit invoices on a monthly basis.
  • In cases where there is a dispute about the amount owed or the quality of the work, owners would be permitted to deliver a notice of non-payment within 14 days of receiving the invoice. Successive payers would be permitted to deliver a notice of non-payment within seven days. Any undisputed amounts will have to be paid.
  • The prompt payment provisions will apply to payments made under contracts entered into on or after the date the amendments come into force (s. 6.8).

Cheap & Quick Interim Adjudication: Targeted Interim Binding Dispute Resolution (s. 8 of the Amendment Act)

  • This dispute resolution method will be mandatory on all construction projects, public and private.
  • Parties to a construction contract will be entitled to refer disputes to adjudication (based on the UK model) that flow from a proper invoice under a contract, including claims for valuation of work, services and materials and other monetary claims made in accordance with the contract, as well as set-offs, deductions and delay claims.
  • Parties will be free to draft their own provisions so long as the provisions are consistent with the Act.
  • The party with the issue will deliver a notice of adjudication to the party with whom they have a contract. The receiving party will have two days to determine if it agrees with the proposed adjudicator. Five days later, there will be a referral notice, a notice of adjudication and back-up documents from the claimant to be provided to the adjudicator. Ideally, within 30 days, the adjudicator delivers a written decision.
  • If a decision to pay is not obeyed, the party expected the payment would be entitled to suspend work under the contract.
  • In the experience of the UK, only a small number of cases go from the adjudication to litigation or arbitration.
  • The adjudication procedures will apply to contracts entered into on or after the day the amendments come into force (s. 13.6).

Greater Lien Rights (ss. 12-16 and 27-31 of the Amendment Act)

  • The timeline for contractors and subcontractors to register a lien is extended from 45 days to 60 days.
  • The subsequent timeline to perfect a lien by commencing an action is also extended from 45 days to 90 days.
  • The definition of "improvements" is expanded to include capital repairs that extend the normal economic life of a structure. This means that lien rights are also expanded.
  • Frivolous, vexatious or abusive liens will be a discharged in whole or in part.
  • Minor errors to liens will not automatically mean a lien invalidation.
  • Forms will be standardized, including written Notices of Lien.
  • Lien claims under $25,000 to be referred to the Small Claims Court.
  • Time limit to register liens would be extended to encourage parties to first attempt adjudication.

Holdbacks (ss. 17-25 of the of the Amendment Act)

  • Holdback will remain at 10% of the value of the improvement, but security can be offered in lieu of cash holdbacks.
  • The release of holdback will be mandatory: the owner will be required to publish a notice of non-payment/set-off to interdict the obligation to pay holdback where the owner in good faith intends to assert set-off.
  • The holdback funds will have to be paid as soon as the deadline to register liens has passed.
  • Release of holdbacks will be permitted on a phased basis for longer or phased projects.

Updated Definitions (ss. 1-2 of the Amendment Act)

  • Substantial performance financial threshold tiers will increase from $500,000 to $1,000,000
  • Total completion will be increased to lesser of 1% or $5,000
  • The Amendment Act introduces many new, updated or replacement definitions to take into account modern project structures, including "owner", "contractor", "subcontractor", "broader public sector organization", "improvement", "municipality", "capital repair", and "price" among others.

New Trust Fund rules (s. 8 of the Amendment Act)

  • The Act will not implement a requirement for project-specific bank accounts, but there are some new rules relating to the deposit, administration, recording and traceability of project trust funds

These changes will have a profound impact on the Construction Industry. From liens, to holdbacks, to dispute resolution, the new Bill will alter all of them dramatically. We optimistically believe that these alterations represent a step in the right direction. If everything goes well, next year we could be dealing with these new changes. Our suggestion? Get ready!

What Happens Next?

Bill 142, Construction Lien Amendment Act, 2017, was recently introduced by Attorney General Yasir Naqvi, on May 31st 2017. For this Bill to become law, there are numerous steps left to be completed. Bill 142 will have to make its way through the second and third reading and most likely committee study before receiving Royal Assent, the last step required for a Bill to become a law. At any time during this process, amendments to the Bill could be proposed.

The Ontario Legislature has adjourned until September 11, 2017. This means that it is only on September 11, 2017 that regular business will restart at Queen's Park in order for the Legislature to take the next step on the road to this Bill becoming law.

That being said, what we know is that the Bill will most likely become law as the government does have a majority at the Legislative Assembly. If the Bill is passed, the Attorney General anticipates that the legislative and regulatory changes will come into effect in 2018.

Is my project affected?

Once Bill 142 becomes law, the amendments will apply to all contracts. However, the prompt payment, and the adjudication provisions will only apply to contracts entered into on or after the date those amendments become law. In addition, many provisions will only become effective after related regulations are adopted and proclaimed in force by the Lieutenant Governor.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
19 Sep 2019, Seminar, Birmingham, UK

Providing GCs, Heads of Legal and senior in-house lawyers with timely, topical and practical legal advice on a variety of topics.

26 Sep 2019, Seminar, London, UK

Providing GCs, Heads of Legal and senior in-house lawyers with timely, topical and practical legal advice on a variety of topics.

8 Oct 2019, Seminar, Birmingham, UK

Supporting the development of paralegals, trainees and lawyers of up to five years' PQE by providing valuable knowledge and guidance together with practical tips.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions