Bill 142: Construction Act

“Coles notes” of what you need to know.

It’s been 35 years since any major revisions of the Construction Lien Act. Let’s welcome Bill 142: Construction Act. The primary goals are to positively influence contractor cash flow and minimize expensive and lengthy dispute resolutions.
*Changes will affect public, Private, and PPP sector projects.

Prompt Payment Regime in Ontario:

  • Owners have 28 days to pay contractors following proper invoice
    • Owners have 14 days to deliver a notice of non-payment or approve the request for payment
  • Contractors have 7 days to pay Sub-Contractors following payment from Owner
  • Subcontractors are required to pay sub-subcontractor within 7 days of receiving payment…and so on
    • Or, deliver a notice of non-payment (35 days following contractors invoice to the owner)
  • If the contractor is delivered a non-payment notice by Client they have 2 choices:
  1. Commence Adjudication/dispute resolution against Owner
  2. Pay Sub-contractors or deliver a notice of non-payment

Resolving a Dispute:

  • The goal is to resolve/make a decision in 30 days
  • The party receiving notice of adjudication will have 2 days to agree with the proposed adjudicator.
  • 5 days later, the claimant must provide a referral notice, a notice of adjudication and back-up documents for Adjudicator.
  • If a decision to pay is disregarded, the claimant can suspend work and or terminate the contract.

Liens:

  • Lien registration is extended from 45 to 60 days
  • Timeline to perfect a lien is extended from 45 to 90 days
  • Lien claims less than $25,000 are referred to small claims court

Holdbacks:

  • Remains at 10% of “improvement” value
  • Security can now be offered in a form of bond or letter of credit, in lieu of Cash
  • The release of Holdback takes place on 61st day following the substantial performance
  • The owner must publish a notice of non-payment/set off by the 40th day following a substantial performance if they choose to set-off or withhold security
  • Substantial Performance financial threshold is now $1M vs. $500,000
    • Based on Total Contract Value (1-3% progress remaining)
  • Holdbacks can be phased to completion of various scopes of work
  • Public projects with contract prices above $500,000 will require a mandatory 50% performance bond and 50% labour and material payment bond
  • Substantial Performance = less than 1% or $5000 remaining

*Visit www.ContractComplete.com and see how we can support You.

Staying active and busy is the highest priority for Alex. On the squash court, hockey rink or golf course; this is where you will find him when he isn't working, exploring local history, brewing ales, or attempting to art. "Reality leaves a lot to the imagination" ~ AE

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