Bill 142: An Act to Amend the Construction Lien Act

On May 31, 2017 Bill 142 was introduced and passed first reading in the Ontario Legislature, in response to recommendations resulting from an expert review of the Construction Lien Act (CLA), and stakeholder input. Bill 142 represents the most significant set of changes to the CLA since it was first introduced in 1983; public hearings are underway, and it is expected that Bill 142 will pass into legislation in the spring of 2018 and if passed, the CLA will be renamed the Construction Act. The Bill contains many significant updates and amendments and some of the most significant changes are outlined below:

• Extending various deadlines, including the deadline for registering a lien from 45 to 60 days
• The introduction of a prompt payment system which provides for specific timelines for the payment of a proper invoice by an owner to a contractor (28 days), and payments by contractors to sub-contractors (7 days) after being paid. A process with timelines for non-payment is also specified
• The introduction of dispute resolution through a mandatory adjudication process; liens claims under $25,000 would be referred to the Small Claims Court
• Updated rules regarding holdbacks, including offering security in lieu, and the phased release of holdbacks for longer term projects
• Trust accounting requirements for contractors and subcontractors
• Substantial performance financial threshold tier increasing from $500,000 to $1 million and total completion from the lesser of 1% or $5,000

While the proposed changes are sweeping in nature they would modernize the rights and obligations of construction industry participants, and the way in which issues are resolved.