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Ontario launches review of Construction Lien Act

Review comes in the wake of a skirmish in the construction industry following the introduction of the Prompt Payment Act in 2013.


Ontario is moving ahead with its intention to review the Construction Lien Act and has selected a lawyer to conduct an independent review. Bruce Reynolds, an expert in construction law and a senior partner with Borden Ladner Gervais, will lead the review along with his partner Sharon Vogel.
The review comes in the wake of a skirmish in the industry that occurred after the Prompt Payment Act was introduced as Bill 69 in 2013. If passed as drafted that legislation would have initiated wide ranging new changes in the industry, such as giving contractors the right to suspend work if a progress payment were not made. It also proposed a period limited to only 20 days for the consultant and owner to review an application for a progress payment.
The Prompt Payment Act proposal was supported by contractors, trade organizations and unionized labour who argued that late payments were unfair on a variety of counts. They said the practice is so common it invites abuse, offloads risk down the chain of parties involved in projects to those least able to support the hardships, and tilts the playing field towards large contractors and subcontractors that can bear the added costs.
After Bill 69-2013 received its second reading, building owners, including school boards — as well as general contractors — became concerned, urged caution and campaigned against the proposals. By April of 2014, the provincial government announced that in view of the concerns it would review the Construction Lien Act.
The announcement last week on February 11 now starts the process of the review, which is slated to be completed by December 2015. The government says the review will include an examination of payment issues within the construction sector. It will involve extensive consultation with the construction industry, followed by a report to the province with recommendations for changes, “if necessary.”
The reviewers will first issue an introductory letter to key stakeholders describing the next steps and preliminary plans.
Ontario’s Construction Lien Act was enacted in 1983 and last amended in 2010. It establishes a system of lien and holdback rights, and trust provisions”to provide financial protection to those who supply services or materials to a construction project.”
To read the Ontario government press release click here.

To read previous related articles, click here.

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4 Comments » for Ontario launches review of Construction Lien Act
  1. Brian Chernoff says:

    I live in Quebec, and I know of an example where the owner of a relatively large condo project willfully failed to pay a small contractor in a timely manner, causing him to go bankrupt. The owner probably came out well ahead on that one, although I understand even in bankruptcy the contractor still has rights. I blame the contractor for not requiring the owner to provide progress payments. I like the idea of being able to stop work, if not paid in a timely manner. That is the only stick a contractor has, that and mechanic’s liens, but the last is expensive.

  2. Don McLaughlin says:

    The construction lien can be very useful for consultants and I have used it a few times here in BC with success. Consultants are often the first ones in on a new development and sometimes even before the developer has secured financing because the developer needs drawings in order to estimate costs. If the costs come in too high or the developer is refused financing it can be a challenge to get paid. A construction lien on the property is often the only way to get their attention.

  3. Cyrus says:

    I feel in a way that it is the contractor’s right to get their payments faster to be able to move faster for continuing the project. It was cases that contractors lost the jobs for late payments. Actually some of them who do not enough cash flow to handle the job. Actually this will be an opportunity for professionals with lower deposit accounts to be involved in projects too.

  4. Don McLaughlin says:

    Filing a Builders lien is inexpensive, at least here in BC. It can be filled out on line and cost $5 plus the cost of a title search for the property. It may take a while to collect as it really doesn’t get their attention until they try to sell the property or use the property as collateral for a bank loan.

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