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By rdnewsNOW Staff

Prompt Payment and Construction Lien Act

Stronger payment rules announced for construction industry

Aug 30, 2022 | 7:02 AM

The Government of Alberta has announced stronger construction rules that they anticipate to bolster the industry.

On Monday, the province shared a new prompt payment framework meant to usher in payment timelines and a dispute resolution process for Alberta’s construction sector.

“Albertans in the construction industry have been advocating for prompt payment legislation for nearly 10 years, so I am excited to celebrate this important milestone. I am proud of the work that Alberta’s government did, collaborating over the last three years with members of the construction industry to develop and pass legislation that will protect jobs and unlock cash flow in this multibillion-dollar industry that employs hundreds of thousands of Albertans,” said Nate Glubish, Minister of Service Alberta.

Formerly known as the Builder’s Lien Act, the Prompt Payment and Construction Lien Act is now in force. The province says the new act creates rules for the timing of payments and sets out a streamlined adjudication process for disputes related to payment or work performed as an alternative to court.

Prompt payment is introduced by mandating owners to provide payment to their contractors within 28 days of receiving a proper invoice for construction services and requires that those contractors who receive payment from an owner subsequently pay their subcontractors within seven days.

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“Payment practices in Alberta have deteriorated over many years. Accounts receivable frequently in excess of 60 days shifts the burden of project financing to contractors and subcontractors. This legislation provides certainty of regular payment for work properly performed and invoiced. The new prompt pay provisions will play an essential role in keeping cash flowing through the life of a construction project. Annual release of lien holdbacks will also free up cash much earlier than under the past legislation,” said Terry Doucette, senior vice-chair of the Alberta Construction Association.

The new act applies to all private construction contracts in Alberta created on or after Aug. 29, 2022. Current contracts that extend past two years must become compliant with the new rules by Aug. 29, 2024.

“On behalf of the hard-working tradespeople and construction trade business owners of Alberta, we are looking forward to the implementation of prompt payment in our province. The ATCC [Alberta Trade Contractors Council] was formed in 2014 with the primary purpose of achieving prompt payment legislation and has been advocating to the Alberta government since then for its implementation. On behalf of the 11 trade contractor associations that are ATCC members, we celebrate the government on this great achievement,” said Terry Milot, chair of the ATCC.

Other legislative changes passed in the fall 2020 and spring 2021 sessions are also now in force:

• Extended timelines (in calendar days) for registering liens from:
  • 45 days to 60 days for the construction industry
  • 45 days to 90 days for suppliers within the concrete industry only
  • The oil and gas lien period remains at 90 days.
• New language added around public-private partnerships:
  • Prompt payment rules only apply to construction, not operations and maintenance.
  • Municipal public works projects are subject to prompt payment legislation, but provincial government projects under the Public Works Act are not.
• Clarification that the prompt payment rules apply to professional consultant (engineers and architects) contracts.