- January 6, 2018
- Posted by: Umar Zulqarnain
- Category: Construction Law, Real Estate Law
Ontario’s New Construction Lien Amendment Act Impacts The Entire Industry
The Construction Lien Amendment Act or Bill 142 was introduced by Ontario’s Attorney General, the Honorable Yasir Naqvi, on May 31, 2017. On December 12, 2017, Bill 142 received royal assent and became part of law. Bill 142 makes several amendments to the Construct Lien Act in response to a 2016 report submitted by the Ministry of the Attorney General and the Ministry of Economic Development, Employment and Infrastructure. The report, titled “Striking the Balance: Expert Review of Ontario’s Construction Lien Act” reviewed the existing Construction Lien Act and recommended changes. Bill 142 makes considerable changes to the Construction Lien Act and will impact every player in the construction industry – from lending syndicates, to independent renovators and construction managers.
Bill 142 renames Ontario’s Construction Lien Act and provides significant updates. The bill was intended to address a number of goals including streamlining the dispute resolution process and expediting payment processes. Key changes include:
1. Subcontractors and contractors will have more time for dispute resolution outside of the courtroom. The bill extends the timeline to file liens and start court actions from 90 days to 150 days.
2. Holdback funds must be paid once deadline to file lien passes. This provides subcontractors and contractors with greater certainty for when to expect full payment.
3. Public sector projects above a certain amount will be required to have surety bonding. This protects subcontractors and workers if the general contractor files for bankruptcy.
4. Liens against common elements in condominiums (lobby, hallways, etc) can be removed from a particular unit by the condominium unit owner.
5. Construction lien claims under $25,000 will be referred to small claims court.
“This is the biggest change to our construction laws in over 34 years,” said Attorney General Yasir Naqvi. “These changes will have a real impact on people’s lives, giving workers assurance they will be paid on time and in full, and help to ensure disputes are resolved quickly.”
This new piece of legislation provides significant relief to subcontractors and contractors who face uncertain payment processes and often do not get paid for work completed. The process will help reduce the cost of hiring a lawyer by providing greater opportunity for dispute resolution. With Toronto’s real estate industry performing well, Bill 142 is a welcome modernization of an outdated piece of legislation.