Prompt Payment Bill
Many of our local construction industry peers charge a fee when receiving payments over 30 days, sometimes it can be 2%, or more, or a flat fee. Are you aware of the Prompt Payment Bill also called Bill 152 or The Builders’ Lien (Prompt Payments) Amendment? Last year on November 20th, 2018 the Prompt Payment bill was introduced mandating the prompt payments of contractors, subcontractors and other stakeholders in the Saskatchewan construction industry. Saskatchewan’s amendments follow the introduction of Ontario’s Bill 142, the Construction Lien Amendment Act back in 2017.
Our provincial government was receptive but required education on the topic. The introduction of the Prompt Payment Bill seeks to ease the economic pressure on the construction industry. The Saskatchewan Construction Association (SCA) believes this legislation “will provide contractors with tools to communicate clearly with owners about their payment cycles and manage relationships when payments are not forthcoming.” There will be established guidelines for the payment and invoicing timelines of construction contracts. The goal is to aid contractors, even the small-scale ones, to enforcement and contest tardy payments without the expensive and lengthy legal process.
The Builders’ Lien (Prompt Payment) Amendment Act was passed only recently on May 2nd, 2019 after three years of the SCA advocating for protecting and addressing the issues with owners and delayed payment of their contractors. Ontario’s Bill 142 was launched in phases, the first focus on the promptitude of liens, large-scale holdbacks, and public-private partnership (PPP) related provision acquisitions and the second phase will introduce more substantive changes to legislation. The first phase of the amendments to the Ontario Construction Lien Act just recently went into effect a little over a year ago on July 1st, 2018. The Ministry of the Attorney General (for Ontario) has two terms that are important to the Prompt Payment Bill:
- A construction lien is a charge or security on a property that can be registered on title to the property by anyone who has supplied services or materials to improve the property.
- A holdback is a requirement that all owners, contractors and subcontractors withhold 10% of the cost of the services or materials they supply on a project. This helps to make sure that there is enough money to satisfy any lien claims that may come up.
Currently, the Ministry of Justice for the Province of Saskatchewan is consulting on the Prompt Payment bill and there are talks of Manitoba developing their own amendments to the Builder’s Lien Act. It has yet to be seen if our bill will be passed in phases or how it will be introduced. To review many of the key changes introduced with the Prompt Payment Bill there are excellent articles written by lawyers in layman’s terms found here: http://www.mckercher.ca/resources/saskatchewan-introduces-prompt-payment-bill-for-construction-industry
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