In December 2017, the Construction Lien Act was heavily amended to include new schemes for prompt payment and adjudication, among other changes. The Act is now called the Construction Act. Although many of the provisions relating to construction liens have remained untouched, there have been some key changes. In particular, the timelines to preserve and perfect a construction lien have been extended.
The first step in pursuing a construction lien claim is to preserve the construction lien by registering a construction lien against title to the property where the work was done. (In some circumstances, the construction lien needs to be served instead of registered.) Under the old Construction Lien Act, a lien claimant had 45 days to register its construction lien. Under the new Construction Act, that time period has been extended to 60 days. The event that triggers when this period begins to run depends on the circumstances and the lien claimant’s position in the construction pyramid.
For a general contractor who is retained directly by the owner, the construction lien must be registered within 60 days of the earlier of:
- when a certificate or declaration of substantial performance is published (if any); and
- when the contract is completed, abandoned, or terminated.
For a subcontractor or sub-subcontractor, the construction lien must be registered within 60 days of the earlier of:
- when a certificate or declaration of substantial performance is published (if any);
- when the person last supplied services or materials to the project;
- when the contract is completed, abandoned, or terminated; and
- when the subcontract is certified as completed.
Following preservation, a construction lien claimant must perfect its construction lien by commencing a court action to enforce the construction lien and register a certificate of action on title to the property where the work was done. (In some circumstances, the certificate of action need not be registered.) Under the old Construction Lien Act, the construction lien claimant had 45 days to perfect its construction lien after the last day on which the construction lien could be registered. Under the new Construction Act, the construction lien claimant has 90 days to perfect its construction lien after the last day on which the construction lien could be registered.
Transition: Does the old Construction Lien Act or the new Construction Act apply?
The new Construction Act also includes new transitional rules. This is important because there were many construction projects in progress at the time that the amendments to the Construction Lien Act were made and which rules apply is important. For many projects, the old, shorter Construction Lien Act timelines to preserve and perfect a construction lien still apply. In particular, if the prime contract between the owner and the general contractor was entered into, or the procurement process for that prime contract (such as a request for tenders, proposals, or direct quotations) was commenced, before July 1, 2018, the old 45-day timelines to preserve and perfect a construction lien still apply to the whole project. Subcontractors and sub-subcontractors should be especially wary of these transition rules because they may not been aware of when the prime contract was entered into or when the procurement process began. Either of these events may have occurred long before the subcontractor or the sub-constructor became involved.
Potential construction lien claimants should seek out advice from a lawyer to help them determine which timelines apply to their project well before any of the potential deadlines may expire.