In December of 2017, the Ontario government successfully voted into legislation Bill 142, modernizing the Construction Lien Act introduced in 1983. The Act, now called the Construction Act will significantly impact all stakeholders in Ontario’s construction sector.
The amendment introduced mandatory changes to the lien and holdback procedures, while introducing an adjudication process for contract dispute and new prompt payment rules. Following the recommendations offered by numerous construction associations and advisory boards, Bill 142 is highly favored and seen as a logical step forward in improving the efficiency of the construction sector in Ontario.
Most notably, the Construction Lien Amendment Act introduces:
- Requirements to provide surety bonds on all Ontario public sector projects over a specified amount.
- Construction Dispute Interim Adjudication to allow a mechanism for dispute resolution without having to stop work
- Modernizing the lien and holdback procedures currently in place
- Creating a prompt payment regime to establish more secure payment rules including timelines for payment down the contractor supply chain
Added protection for creditors
Although Bill 142 received Royal Assent on December 12th and is now law, only some minor amendments came into force immediately. The remainder of the Act is expected to come into force upon proclamation, which will follow a review for public feedback in February.