Prompt Payment and Construction Lien Act In Force

After years of drafting, amending, and waiting, the Prompt Payment and Construction Lien Act (“PPCLA”) comes into force today (August 29).

Transition to a new regime

In Alberta, any contracts with respect to an improvement on land entered into from today on must comply with and be carried out in accordance with the terms of the PPCLA. The PPCLA has provided for a period of transition to the new legislation; contracts that were entered into before August 29, 2022 remain subject to the “old” Builders’ Lien Act (“BLA”). However, if a contract will last for more than two years from today’s date, it must be amended to comply with the PPCLA and, in particular the new prompt payment rules, within two years. In other words, after August 29, 2024, all contracts must comply with the PPCLA.

Of note, contracts with respect to Public Works or agreements to finance and provide improvements with the Province of Alberta (or an agent of the Province) are expressly exempt from the PPCLA; these contracts do not require revision.

This creates some confusion with respect to ongoing projects where contracts are subject to the old BLA and new subcontracts will be governed by the PPCLA. The PPCLA does not provide for this situation. Contractors and owners should consider amending their contracts to comply with the PPCLA as soon as possible so that projects are subject to only the PPCLA in order to avoid any confusion surrounding operating under both sets of legislation.

Things to know

A Nominating Authority still has not been appointed to administer the adjudication process, including the qualification and appointment of adjudicators. We expect that the Nominating Authority will be designated and the adjudication process will be operational soon, hopefully within a month. However, no commitments have been made or information provided in this respect.

Owners and contractors should review current practices to determine if they comply with the PPCLA. Some of things to consider are:

  • Do contracts, including terms, supplemental conditions, forms or schedules require revision?
  • Do financing arrangements need to be updated in light of the prompt payment regime and associated time for payment?
  • Updating invoicing and payment processes, including accommodation for the apportionment of partial payments.
  • Ensuring that prompt payment timelines are known and added to all administrative, project management and execution processes.
  • If electronic posting of certificates of substantial performance is to be used, determine the electronic method that will be used.
  • Adjustment of payment timelines and accounting processes to track the new holdback and lien periods.
  • Ensuring project document management systems are in place to allow for quick preparation of dispute notes or response to the adjudication process.

The transition to the PPCLA comes with a learning curve for all. We have covered some aspects of the PPCLA and potential issue in our prior articles:

If you have any questions our team is ready to help. For any questions you may have about the PPCLA, or any construction issue, contact any member of the McLennan Ross Construction Practice Group.