Every Canadian province and territory has its own builders lien act meant to ensure that contractors and workers who contribute to improvements on land are paid for their services and materials. These acts are complex and can cause confusion, particularly where construction companies do business in multiple provinces.
On August 29, 2022, Alberta is set to introduce the Prompt Payment and Construction Lien Act (the PPCLA). This new act will amend some of the builders lien rules that stakeholders in the construction industry have become accustomed to while working in Western Canada.1
In this article, we set out some of the key differences between the British Columbia Builders Lien Act (the BC BLA) and Alberta’s new PPCLA.
If you have two minutes, print this table. If you have ten minutes, read on.
Entitlement to file lien claim
Lien claimants under both Acts may include a contractor, subcontractor, worker, or supplier who does work or furnishes materials in relation to an improvement. The BC BLA does not give lien rights to parties who provide work or materials to an architect, engineer or material supplier. The PPCLA does not exclude regulated professional architects or engineers acting in a consultative capacity from filing lien claims.
Excluded lands and improvements
Neither Act applies to Federal Crown lands or public highways.
In addition, in BC, lien claims cannot be filed on forest service roads on Crown land and improvements done by or for the Minister of Forests, Lands, Natural Resource Operations and Rural Development.
In Alberta, lien claims cannot be filed against land held by an irrigation district, public works, and any agreement to undertake improvements with the provincial Crown or a provincial corporation acting as agent of the Crown.
Lien filing deadline
In BC, lien claimants have 45 days from the date of the triggering event under the BLA to file a claim of lien. The 45-day timeline is triggered by the earlier of the:
- issuance of a certificate of completion;
- completion, abandonment, or termination of the head contract;
- date the improvement itself is completed or abandoned if there is no head contract; or
- conveyance of a strata lot.
In Alberta, the new lien claim filing deadline will generally be 60 days from the relevant triggering event, being the date from which:
- the last of the materials is furnished or contract is abandoned;
- the performance of services is completed or contract is abandoned;
- the work for which wages are claimed is completed or abandoned; or
- the relevant contract or subcontract is completed or abandoned, if the above circumstances do not apply.
For work related to an oil or gas well or site or concrete-related work (except ready-mix concrete), the lien filing deadline is 90 days from the triggering event.
In BC, lien claimants have one year to commence a court action in the BC Supreme Court and to register a Certificate of Pending Litigation on title to enforce a claim of lien. This timeline can be reduced to 21 days where a Notice to Commence an Action is served on the lien claimant.
In Alberta, lien claimants will have a choice of opting into a new adjudication process or proceeding by way of court. Where court proceedings are chosen, a lien claimant must commence a court action and register a Certificate of Lis Pendens within 180 days of filing the lien claim. This timeline can be reduced to 30 days upon service of a Notice to Commence an Action.
In BC, the obligation to maintain a holdback extends to all persons in the contractual chain under which a lien may arise. The holdback is 10% of the greater of the value of the work or material actually provided, and the amount of any payment made on account of the contract price. An owner is required to establish a separate bank account for the holdback and to administer the account together with the contractor.
In Alberta, only the owner has an obligation to retain a holdback, and unlike in BC, there is no requirement to create a holdback bank account. An owner must retain amounts equal to 10% of the value of the work or material actually provided, in addition to any amount owed but not yet paid under that contract after a lien is registered.
The holdback period
In BC, the holdback period ends 55 days after the date of the same triggering event applicable to calculating the lien filing deadline.
In Alberta, the holdback period ends 60 days from the date of issuance of a certificate of substantial performance, or where there is no such certificate, the completion of a contract. This period is extended to 90 days for improvements related to an oil or gas well or site, or concrete related work.
Under the BC BLA and the PPCLA, where no claim of lien has been filed, the holdback may be released after the holdback period has expired. Generally, the owner may first assess whether it has a claim of set off pursuant to the terms of the contract. However, under the PPCLA an owner is required to release holdback amounts for:
- multi-year projects where the contract provides for the payment of accrued amounts either on an annual basis or on a phased basis; and
- a contract with an initial price of more than $10 million.
Invoicing and payment requirements
The BC BLA does not include any invoicing requirements.
In Alberta, a significant change ushered in by the PPCLA is the inclusion of specific invoicing and payment obligations:
- contractors must give owners a “proper invoice” (as prescribed in the PPCLA every 31 days);
- if the amount invoiced is undisputed, the owner must pay the invoice no later than 28 days after its receipt;
- the contractor must then pay each subcontractor no later than seven days after receipt of payment from the owner; and
- each subcontractor must pay each sub-subcontractor no later than seven days after receipt of payment from the contractor.
Provincial builders lien acts are complex statutes that cover a myriad of issues and circumstances.
For a complementary more fulsome review, please read the article on Dentons Mining blog, Alberta’s Prompt Payment and Construction Lien Act: Key amendments that will impact stakeholders from the construction industry.
1 The PPCLA contains transitionary clauses; parties to construction contracts that last for longer than two years after August 29, 2022, have until August 29, 2024 to amend their contracts so that they comply with the PPCLA.