What you need to know about the new changes to the Construction Lien Act

Ontario’s Bill 142 received Royal Assent on Dec. 12, 2017 and ushered in broad reforms to the Construction Lien Act.  The first of those reforms came into force on July 1, 2018.

Here is what you need to know.

As of July 1, 2018, the name of the act changed to the “Construction Act,”  and amendments to the construction lien and holdback rules are now in force.

These include, among other things:

• The time for perfecting liens is extended from 45 days to 60 days (Note: the manner in which the time periods are calculated has not changed);

• The time for preserving liens is extended from 45 days to 90 days (Again, the manner in which the time periods are calculated has not changed);

• The new Construction Act will make it mandatory for an owner to release the statutory holdback funds once the lien period has expired, unless the owner publishes a notice of non-payment in the prescribed form within 40 days of the publication of the certificate of substantial performance, and notifies the contractor of the publication;

• Provisions to allow for phased payment of holdbacks on larger projects of a significant duration are now in force;

• Changes dealing with P3s, including “who is the owner” on P3 projects are now in force; and

• The monetary thresholds for substantial performance, completion and for the posting of costs upon the vacating of a lien have all increased.

How do I know whether the July 1, 2018 amendments apply to my contract?

The amendments apply to all contracts entered into on or after July 1 (regardless of when any subcontract is entered into) with two exceptions:

1. Where a procurement process for the improvement was commenced before July 1, 2018, or

2. Where the lands are subject to a leasehold interest, and the lease was first entered into before July 1, 2018.

Two of the most significant changes to the act will not come into force until Oct. 1, 2019. These include the introduction of a prompt payment system, as well as mandatory adjudication for certain disputes. For more information regarding these reforms, visit our website at https://nelligan.ca/bill142.

For more information regarding changes to Ontario’s construction lien legislation, or how these changes may affect your business, contact our Commercial Litigation Group.

David Contant is a partner at Nelligan O’Brien Payne, and a member of the Commercial Litigation, Employment, and Personal Injury groups.