Changes Coming to Construction Lien Act Ontario 2019

In 2017, Ontario Legislation passed the Construction Lien Act 2017. This act was created to introduce significant changes to the Ontario construction lien regime. The goal is to reduce the number of delays in the construction as well as establishing a mechanism for dispute resolution so that construction liens don’t need to go to courts. While the act was passed in 2017, in recent years, there have been some rule changes that will improve the experience for clients and construction companies. The first set of changes has already been in effect; the second set is taking effect on October 1, 2019.
Rule Changes for the Construction Lien Act Ontario 2019


One of the most significant changes is the “prompt payment” change. This change imposes tight timelines for payments to the contractors and subcontractors for both private and public contracts. Under this new change, the outstanding amount that exists between the contractor and owner needs to be paid within 28 days of receiving the proper invoice. Any subsequent payments to the subcontractors have to be paid within seven days after the contractor receives their payment from an owner. Should the contractor not get paid within these 28 days, they can decide whether they want to submit payment to the subcontractor or issue a notice of “non-payment.” Should the owner dispute any portion of the funds, the owner will still need to pay any undisputed amount.
As soon as the proper invoice is sent, it triggers the timelines as stated in the Act. If the timelines and payments are not made, contingent on the prior approval and certification of the owner’s invoice, owners are required to comply with the timelines and provide notice of non-payment within 14 days. Contractors need to give non-payment notice within seven days after receiving the non-payment notice from the owner. If they did not receive a payment or an issue of non-payment after 35 days from the date of the proper invoice, the contractor still needs to issue a notice of non-payment.
These changes also discuss what a proper invoice must contain to be valid:


•    Contractor’s name and address
•    Date of the invoice and the period when the contractor supplied the services and materials
•    Information about the contract, which identifies the authority of what services and materials were provided
•    Description of the services and materials that were supplied, such as the quantity supplied.
•    Payment terms and the amount payable for the materials and services provided
•    The name, title, telephone number, and mailing address of the owner who will receive the invoice
•    Other information that is relevant to the contract


Another significant change is the new adjudication process. As a way to facilitate a quick resolution of these construction issues that may arise, the Act creates a new interim adjudication. This process intends to help the parties resolve any issues while still retaining the principles of the lien under the Act. All of the parties can agree on the adjudication terms included in the agreement.
There are quite a few types of disputes that can be referred to the adjudication, such as:
•    Delays
•    Set-offs
•    Security
•    Deductions
•    Valuation of work (as well as materials and services)
•    Proper invoicing
The adjudicators are people who are appointed by an Authorized Nominating Authority registry. The adjudicator’s scope is comprehensive, including any matter that to which all of the parties in adjudication agree. The adjudicator can only be nominated when there is a dispute that has arisen, and they cannot be appointed ahead of time. The process begins when a Notice of Adjudication is sent. The adjudicator must provide their decision within 30 days of the process’ commencement. Parties can appeal the decision, and any decision after this 30-day prior is not valid.
The last part is the jurisdiction and procedure. Since the Act has an adjudication process, there are quite a few provisions that relate to the jurisdiction, and the procedure is going to be repealed. Some of these repealed parts, including the lien and trust claims, need to be brought in a single action, the requirement of the jurisdiction being where the lien is located, and the leave for interlocutory steps are not required.


How these Rules Benefit Clients and Construction Companies
There are many benefits to these new rules. For one thing, there are clear expectations as to what the timelines of the payments are, which reduces the delays in the contractor receiving payments. It also streamlines the process more, making it easier for all of the parties involved to resolve any issues that they may have with each other. The whole process is easier now because of these new changes. The Act initially was created to overhaul the construction rules in Ontario. The new rules do precisely that, with all of these changes taking effect soon.
The parties need to agree on the resolution, which can help make this process go smoothly. It may be a little more complicated to navigate the process at first, but ultimately, this can help you to have a more positive experience for all parties.


Conclusion
If you are confused about any of these new changes and how they affect you, there is the option of speaking to someone who specializes in Ontario construction laws. They can answer any questions that you may have about the process and any additional information that you may need to know about this process. To avoid any issues in the future with these new laws taking effect, it can also be an excellent idea for you to consult with a construction law attorney to help you draft contracts and proper invoices, as well as take a look at your general practices to ensure that you comply with these new laws. These laws take effect in October 2019, and you want to be ready for when they do.