Alberta’s prompt payment rules aim to fortify construction industry

by arslan_ahmed | September 20, 2022 5:34 pm

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Formerly known as the Builder’s Lien Act, the Prompt Payment and Construction Lien Act has been implemented in Alberta—it creates rules for the construction industry’s payment timelines and sets out a streamlined adjudication process for disputes related to payment or work performed, without court involvement. Photo courtesy Bigstock

Formerly known as the Builder’s Lien Act, the Prompt Payment and Construction Lien Act is in effect in Alberta, creating new rules for the construction industry’s payment timelines and setting out a streamlined adjudication process for payment or work-related disputes, without the need for court involvement.

The act requires owners to provide payment to their contractors within 28 days of receiving a proper invoice for construction services. It also requires the contractors who receive payment from an owner subsequently pay their subcontractors within seven days.

The new act applies to all private construction contracts in Alberta created on or after Aug. 29, 2022. Current contracts drafted more than two years ago must become compliant with the new rules by Aug. 29, 2024.

Other legislative changes brought about by the act are as follows:

Other important considerations of the act are stated below:

Trevor Doucette, senior vice-chair, Alberta Construction Association said: “Payment practices in Alberta have deteriorated over many years. Accounts receivable frequently in excess of 60 days shifts the burden of project financing to contractors and subcontractors. This legislation provides certainty of regular payment for work properly performed and invoiced. The new prompt pay provisions will play an essential role in keeping cash flowing through the life of a construction project. Annual release of lien holdbacks will also free up cash much earlier than under

Endnotes:
  1. [Image]: https://www.constructioncanada.net/wp-content/uploads/2022/09/AA_AlbertaConstruction.jpg

Source URL: https://www.constructioncanada.net/albertas-prompt-payment-rules-aim-to-fortify-construction-industry/