The Prompt Payment And Construction Lien Act: Two Years On

MT
Miller Thomson LLP

Contributor

Miller Thomson LLP (“Miller Thomson”) is a national business law firm with approximately 500 lawyers across 5 provinces in Canada. The firm offers a full range of services in litigation and disputes, and provides business law expertise in mergers and acquisitions, corporate finance and securities, financial services, tax, restructuring and insolvency, trade, real estate, labour and employment as well as a host of other specialty areas. Clients rely on Miller Thomson lawyers to provide practical advice and exceptional value. Miller Thomson offices are located in Vancouver, Calgary, Edmonton, Regina, Saskatoon, London, Waterloo Region, Toronto, Vaughan and Montréal. For more information, visit millerthomson.com. Follow us on X and LinkedIn to read our insights on the latest legal and business developments.
On August 29, 2022, amendments to the Alberta Builders' Lien Act, RSA 2000, c B-7 (the "BLA") came into force and that act became the Prompt Payment and Construction Lien Act...
Canada Ontario Alberta Real Estate and Construction

Introduction

On August 29, 2022, amendments to the Alberta Builders' Lien Act, RSA 2000, c B-7 (the "BLA") came into force and that act became the Prompt Payment and Construction Lien Act, RSA 2000, c P-26.4 (the "PPCLA"). The PPCLA makes a number of amendments to the BLA, primarily introducing the concepts of prompt payment1 and adjudication,2 in addition to more procedural elements such as extending the lien period to 60-days. At the two-year mark these additions are more familiar on Alberta projects, but we expect most parties are far from comfortable with the obligations imposed by the prompt payment timelines and the possibilities of in project construction adjudications.

As of August 29, 2024, the transition period set out in in the PPCLA has passed. The transition provisions provided that contracts or subcontracts entered into prior to August 29, 2022 were governed by the terms of BLA, however, where a contract was in force prior to August 29, 2022 and scheduled to be in force past August 29, 2024,3 that contract was required to be amended within those two years to comply with the new provisions of the PPCLA.4 While we anticipate that not all contracts have been amended, and the language in the transition provisions is less than clear, it is likely the case that the terms of the PPCLA now apply to all construction agreements in Alberta, irrespective of the date entered into or the status of amendments. It is certainly the case that many parties will be operating on this assumption. On contracts pre-dating August 29, 2022, this means the new prompt payment obligations, potential construction adjudications and extended holdback periods are now in effect. Owners should be alert to these obligations, and the possibility that potential claimants will seek these remedies.

Changes made by PPCLA

Miller Thomson LLP's construction lawyers have previously written about the substance of the changes implemented as part of the PPCLA coming into force, in particular in the posts listed below:

Case law

In addition, we have provided commentary on case law arising from the PPCLA, and the Ontario Construction Act, which includes many similar provisions. These decisions are very informative in understanding how the legislation will be interpreted, and the many pitfalls that parties should seek to avoid. These articles can be found as follows:

Lastly, please note that if the applicable contract was formed prior to August 29, 2022 and has not been amended to conform with the PPCLA, then the safest path is still to register a lien within the 45-day lien period. As always when it comes to preserving lien rights, it is better to be safe than sorry. On the opposing side we would similarly caution owners not to rely on a 45-day holdback release period as liens may still appear until the expiry of the 60-day lien period.

Footnotes

1. PPCLA, Part 3.

2. PPCLA, Part 5.

3. PPCLA, s. 74(3).

4. Prompt Payment and Adjudication Regulation, Alta Reg 23/2022, s. 37.

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.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More