September 28, 2021

Author: Kevin Stenner

Beginning in late 2020, and through the first half of 2021, the Government of Alberta has been working to update the Builders’ Lien Act. Although not yet in effect, one of the main purposes of these updates is to introduce timelines and rules to ensure that contractors and subcontractors are paid in a timely manner. 

Alberta currently has no legislated payment timelines in the construction industry. This has led to uncertainty and numerous unnecessary lawsuits in Alberta’s construction industry. However, the proposed changes to the Builders’ Lien Act look to add a measure of certainty to the industry by setting a timeline of 28 calendar days for project owners to pay general contractors and a timeline of 7 calendar days after payment is received for contractors to pay subcontractors.

Prompt Payment Amendment Act Changes to the Builders’ Lien Act

In addition to these changes, Bill 37: Builders’ Lien (Prompt Payment) Amendment Act, 2020  makes changes to the timelines for the filing of liens, the minimum amount of a lien and the dispute resolution process. In summary, the Prompt Payment Amendment Act makes the following changes to the Builders’ Lien Act:

(a) Sets a 28-day timeline for project owners to pay invoices to general contractors, provided that the general contractor issued a “Proper Invoice.” A Proper Invoice is one that includes:

• the contractor’s name and business address;
• the date of the proper invoice and the period during which the work was done or materials were furnished;
• information identifying the authority under which the work was done or materials were furnished (i.e.: a contract);
• a description of the work done or materials furnished;
• the amount requested for payment and the corresponding payment terms;
• the name, title and contact information of the person to whom the payment is to be sent;
• a statement indicating that the invoice provided is intended to constitute a proper invoice; and
• any other information that may be prescribed.

(b) Sets a seven-day timeline for contractors to pay subcontractors after receiving payment, provided that the contractor received full payment of the Proper Invoice.

(c) Extends timelines for the registering of liens, as follows:

• for the construction industry, from 45 days to 60 days; and
• for the concrete industry, from 45 days to 90 days.

(d) Increases the minimum amount owed that can be subject to a lien from $300 to $700.

(e) Contemplates the creation of a statutory adjudication system to determine construction disputes through a faster and less costly dispute resolution process than going to court. Although the Government of Alberta has passed Bill 62 (The Red Tape Reduction Implementation Act) to provide some clarity on the applicability of this adjudication system, details of the adjudication system are still sparse. Nonetheless, there is reason to be optimistic that it will provide for a more flexible and informal summary process than the current system. 

(f) Improves access to information. Under the Prompt Payment Amendment Act, a lienholder, a beneficiary of a trust, a contractor or a subcontractor may demand to inspect the contract or statement of accounts as between the project owner and general contractor, or the general contractor and a subcontractor.

(g) Renames the Builders’ Lien Act to the Prompt Payment and Construction Lien Act.

As noted at the start of this post, these changes are not yet in effect and the Government of Alberta has not provided a date for when these changes will take effect (they were supposed to take effect on July 1, 2021, but that date was abandoned). 

When these changes do come into effect, how they pertain to you will depend on your specific situation and the Regulations that will certainly accompany this legislative change. 

Calgary Construction Litigation and Builders’ Lien Act Lawyers

The Construction Team at Carbert Waite LLP has vast experience in helping its clients navigate the Builders’ Lien Act and the resolution of the construction disputes. The team will be happy to answer any questions you may have with respect to these changes or otherwise.