Construction Act transition rules: What act applies?

October 19, 2021 | Michael McCluskey, Mario Concordia

A lien is a powerful and convenient tool used to protect trade and material suppliers in the construction industry. However, despite the convenience of the lien remedy, it is very time sensitive and requires comparatively quick action. As such, it is imperative for contractors in the construction industry to understand the calculation of time associated with preserving and perfecting their lien rights. This is ultimately determined by whether the new Construction Act (the “CA) applies, or whether the old Construction Lien Act (the “CLA”) has been grandfathered into the particular project.

Which Timeline Applies

The first step in identifying the governing timeline of a lien is to determine which act’s timeline applies. As the CLA has been replaced by the CA and construction projects are often many years in the making, transitional provisions have been included in the CA.

The matter of determining which act applies is governed by the transition provision found in article 87.3 (1) of the CA. The provisions of the CLA will apply if:

  1. a contract for the improvement was entered into prior to July 1, 2018;
  2. the procurement process, which includes tender processes and quotation, was commenced by the owner before July 1, 2018, or;
  3. in the case of a premises that is subject to a leasehold interest that was first entered into before July 1, 2018, a contract for the improvement was entered into or a procurement process for the improvement was commenced on or after July 1, 2018 and before the day subsection 19 (1) of Schedule 8 to the Restoring Trust, Transparency and Accountability Act, 2018 came into force.

When determining which act applies, it matters not whether the contract giving rise to the lien was entered into after July 1, 2018. When determining the applicable legislation, one must look to the initial contract for the improvement and the timing of same. This initial contract is what ultimately determines which act all subsequent parties will be bound by in relation to the particular improvement.

Liens falling under the CLA must be preserved within 45 days from the last day on site, or from the date in which a certificate of substantial performance has been published. The lien must then be perfected within the next 45 days following the deadline to preserve.

Liens falling under the CA must be preserved within 60 days from the last day on site, or from the date in which a certificate of substantial performance has been published. The lien must then be perfected within the next 90 days following the deadline to preserve.

The CA also introduced the prompt payment and adjudication regime, however, the critical date for those sections of the CA is October 1, 2019. Similar to the calculation of lien deadlines, if a contract for the improvement was commenced on or after October 1, 2019, then the prompt payment and adjudication provisions also apply to the project in question.

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