On July 1, 2018, the first round of amendments to the Ontario Construction Lien Act now called Construction Act came into force. This article discusses two of these amendments which substantially changed the way lien claims are being dealt with.
The first major change which the new amendments brought is the timeline for contractors and subcontractors to register a lien. Previously contractors or sub- contractors could register a lien within 45 days of (i) the date the contract was completed, or (ii) the date the contract was abandoned. Under the new Act, the 45 days period has been extended to 60 days.
For a contractor or sub-contractor registering a lien was the first step in the process of enforcing its right; after registration of a lien, a contractor or sub-con- tractor had to “perfect” its lien which meant commencing a claim/lawsuit. Under the old Act, the claim had to be commenced within 45 days of the last day which the lien right would have expired; however, under the new Act, the period allowed for the perfection of registered lien has been doubled to 90 days.
Invoices are usually payable within 30 days of rendering them. The old regime did not provide a long period of time for a contractor or subcontractor to register its lien if its invoice was not paid within 30 days of rendering it; however, under the new regime, a contractor has twice as much time to register and perfect its lien. The extension of these two time periods have brought the time lines much closer to the commercial reality of market place.
The first major change which the new amendments brought is the timeline for contractors and subcontractors to register a lien. Previously contractors or sub- contractors could register a lien within 45 days of (i) the date the contract was completed, or (ii) the date the contract was abandoned. Under the new Act, the 45 days period has been extended to 60 days.
For a contractor or sub-contractor registering a lien was the first step in the process of enforcing its right; after registration of a lien, a contractor or sub-con- tractor had to “perfect” its lien which meant commencing a claim/lawsuit. Under the old Act, the claim had to be commenced within 45 days of the last day which the lien right would have expired; however, under the new Act, the period allowed for the perfection of registered lien has been doubled to 90 days.
Invoices are usually payable within 30 days of rendering them. The old regime did not provide a long period of time for a contractor or subcontractor to register its lien if its invoice was not paid within 30 days of rendering it; however, under the new regime, a contractor has twice as much time to register and perfect its lien. The extension of these two time periods have brought the time lines much closer to the commercial reality of market place.
Under the old Act, all lien claims regard- less of their size had to be adjudicated in Superior Court. The new Act allows claims that are within monetary juris- diction of Small Claims Court being any claim under $25,000.00 to be adjudicated there. This helps small contractors and sub-contractors in a profound way since the legal cost to go through Small Claims Court is a fraction of the cost of going through the Superior Court. The cost of pushing a claim in Superior Court was often a major impediment for many contractors and subcontractors to en- force their rights.
The material in this article is for informational purposes only and not for the purpose of providing legal advice.
In the next article, the new changes coming into effect in the fall of 2019 will be discussed.
