THE LAWYER : Modernization of the Construction Act
By NextHome Staff
October 23, 2018
October 23, 2018
By Noah CiglenRobins ApplebyAs one of its final acts of 2017, the provincial legislature passed Bill 142, the Construction Lien Amendment Act, 2017. Bill 142, and the resulting amendments, represent a significant overhaul of the laws governing construction in Ontario. These amendments not only change the name of the act by dropping the word “Lien” from its title – the act is now known simply as the Construction Act – they represent an effort to modernize Ontario’s construction laws and ensure that contractors and subcontractors receive payment in an expeditious manner.The changes made in Bill 142 are being rolled out in two separate phases: amendments in Phase 1, which represent modernization efforts, became effective on July 1, 2018, while the changes contained in Phase 2, which provide a new prompt payment regime and the introduction of a new interim adjudication process for payment disputes, will come into force on October 1, 2019.Phase 1: Modernization Phase 1 modernizes a number of provisions of the act and, amongst other things, expands definitions of key terms and concepts, revises the timelines for construction liens and the rules surrounding holdbacks and implements unique rules for contracts with public entities. Some highlights from the Phase 1 amendments include:
- Increasing the length of time required to preserve and perfect a lien. The preservation timeline has been increased to 60 days from the previous 45, while the perfection timeline has been increased from 45 to 90 days. Additionally, a contractor’s right to preserve a lien is now triggered by the termination of the contract in addition to the completion, abandonment and the publication of the certificate of Substantial Performance.
- Legislating the form of a holdback to be either cash, a letter of credit, or a prescribed bond. No other form is permissible.
- Allowing owners to refuse to pay part of the holdback if, within 40 days of Substantial Performance, they publish a notice of non-payment and notify the contractor.
- Increasing the Substantial Performance threshold from 3 per cent of the first $500,000 and 2 per cent of the next $500,000 and 1 per cent of the remainder, to $1 million in each instance.
- Requiring contractors and subcontractors who are acting as trustees to keep all trust funds in a bank account under its name and to keep separate written records relating to each trust.
- The contractor’s name and address;
- The date of the invoice and the period of time to which it applies;
- Information identifying the authority under which the services/materials were supplied, i.e. written contract, verbal agreement, etc.;
- A description of the services/materials that were supplied, the amount payable and the payment terms; and
- The name, title, telephone number and mailing address of the person to whom the payment is to be sent.