Skylar Caldwell, Henry Villanueva and Mohamed Amery
On August 29, 2022, the Alberta Builders’ Lien Act will be replaced by the Prompt Payment and Construction Lien Act (the PPCLA). The PPCLA will be enforced alongside the Prompt Payment and Adjudication Regulation (the PPAR) and the Builders’ Lien Forms Amendment Regulation (the BLFAR and collectively, with the PPAR, the Regulations). The PPCLA and the Regulations collectively introduce a comprehensive legislative framework with clear timelines and rules for payments within the construction industry in Alberta. If you are involved with the construction industry, whether as a business or contractor, you may be wondering how this new legislative framework will affect you and your work. We’ve written this post to help breakdown the changes introduced by the PPCLA and the Regulations, and what they mean for you.
Statutory Payment Timelines
The Builders’ Lien Act currently has no prescribed rules for payment timelines in the construction industry, meaning that the onus was on the individual parties in each construction agreement to include specific parameters for when payment was due in each such agreement. The PPCLA introduces timelines and rules for payments and liens in all construction industry sectors to ensure that contractors and subcontractors are paid on time within the province. The timelines prescribed under the PPCLA commence when a contractor provides an owner with a proper invoice, and are as follows:
|Payment Parties||Deadline for Payment||Disputes|
|Owner to Contractor||28 days after receipt of a proper invoice.||If the owner disputes the proper invoice or a portion of the proper invoice, the owner must deliver a notice of dispute within 14 days of receipt of the invoice. The notice of dispute must be in the form prescribed under the BLFAR.|
|Contractor to Subcontractor||7 days after receiving payment from the owner.||If an owner delivers an owner dispute notice related to a proper invoice to the contractor, the subcontractors responsible for the work or material related to the dispute will be paid after other subcontractors who performed work or who provided materials that is or are not involved in the dispute by the owner. Except in specific circumstances, even if an owner fails to pay a contractor the amount owed under a proper invoice within the prescribed 28 day period, the PPCLA specifies that the contractor is still required to pay its subcontractors for the work each subcontractor did under the proper invoice within 35 days of the owner’s receipt of the proper invoice.|
|Subcontractor to Subcontractor||7 days after receiving payment from the contractor.||If a contractor fails to pay the subcontractor within 7 days of receipt of payment from the owner, the subcontractor is still required to pay its subcontractor within 42 days after a proper invoice is given by the contractor to the owner.|
Pursuant to Section 32.1(1) of the PPCLA, a proper invoice is defined as a request for payment that is in writing in respect of an improvement under a contract or a subcontract. A proper invoice must also include the information prescribed in Section 32.1(1), which includes, but is not limited to, the contractor’s or subcontractor’s name and address, the date of the invoice and the period during which the work was done or the materials were furnished, a statement indicating that the invoice provided is intended to constitute a proper invoice and any other information that may be specified in the contract for which payment is being made. To further ensure timeliness of payments for work rendered, the PPCLA provides that, except in certain circumstances, a contractor must provide an owner with a proper invoice at least every 31 days throughout the duration of the project it had undertaken.
The PPAR creates a new optional adjudication process to resolve certain disputes in the construction industry and clarifies how such adjudication process will be administered. Except in particular cases, either party to a contract or a subcontract may initiate adjudication proceedings under the PPAR by issuing a written notice of adjudication.
Under the PPAR, issues including the valuation of services rendered or material provided, payment under a construction contract, disputes that are subject to a notice of non-payment, and payment or nonpayment of an amount retained as a major or minor lien fund and owed to a party during or at the end of a contract may be subject to adjudication. A major lien fund refers to the amount of holdback that has accrued before a Certificate of Substantial Performance has been issued by a general contractor. A minor lien fund refers to the amount of holdback that accrues after a Certificate of Substantial Performance has been issued. The PPAR also provides authority to Nominating Authorities to oversee items such as qualifications, responsibilities, expertise, training, and fees of adjudicators in disputes in the construction industry. Under Section 25(1) of the PPAR, an adjudicator may exercise the following powers in adjudication proceedings:
- issue directions to the parties involved in the adjudication;
- obtain information through independent research related to the adjudication;
- conduct onsite inspections where relevant to the adjudication; and
- obtain assistance from construction industry professionals throughout the adjudication process.
Lien Registration Changes
The PPCLA also introduces extended deadlines for filing a builders’ lien. A comparison of the deadlines for filing a builders’ lien under the existing Builders’ Lien Act and the extended deadlines for doing so under the PPCLA can be seen in the table below.
|Type of Builder’s Lien||Extended Deadline Under the PPCLA||Deadline under the Builders’ Lien Act|
|General builders’ liens||60 days after the last day that services are rendered or materials are delivered. ||45 days after the last day that services are rendered or materials are delivered.|
|Builders’ liens related to furnishing of concrete or work related to concrete||90 days after the last day that services related to concrete are rendered or concrete is delivered. ||45 days after the last day that services related to concrete are rendered or concrete is delivered.|
|Builders’ liens related to improvements to an oil or gas well or well site||90 days after the last day that services related to oil and gas well improvements are rendered.||90 days after the last day that services related to oil and gas well improvements are rendered.|
All necessary builders’ lien forms, including those required to file a lien or notice of dispute under the PPCLA, are prescribed in the BLFAR.
The new comprehensive legislative framework within the construction industry in Alberta will apply to all construction-related contracts entered into on and after August 29, 2022. Additionally, all contracts that were entered into before August 29, 2022, if such contracts are scheduled to remain in effect for more than two years following August 29, 2022, must be amended to conform with the PPCLA and its applicable Regulations before August 24, 2024. Although some of the changes introduced by the PPCLA have been discussed in this email, it is important that corporations operating in a construction related field fully understand how the PPCLA will impact their specific business. If you have any questions, Henry Villaneuva or Mohamed Amery would be happy to assist you in understanding and adapting to the legislative changes that will be in force on August 29, 2022.
- Builders’ Lien (Prompt Payment) Amendment Act, SA 2020, c. 30. ↑
- Prompt Payment and Adjudication Regulation, AR 23/2022. ↑
- Builders’ Lien Forms Amendment Regulation, AR 22/2022. ↑
- PPCLA, supra note 1 at s. 32.2(1). ↑
- Ibid at s. 32.3(2). ↑
- Ibid at s. 32.3(4). ↑
- Ibid at s. 32.3(2). ↑
- Ibid at s. 32.5(8). ↑
- Ibid at s. 32.1(6). ↑
- Ibid at s. 33.4(1), 33.4(3), and 33.4(2). ↑
- Ibid at s 33.2(1). ↑
- Ibid at s. 41. ↑
- Ibid. ↑