Gerald R. (Jerry) Genge C.Arb., Q.Med, P.Eng., ODACC Adjudicator
The Construction Act
A Director’s Dozen 12 Things Directors Need to Know About Paying for Building Repair In 2018, there were major changes to the old Ontario Construction Lien Act (now the Construction Act) that significantly affect how and when owners pay for building repairs. These changes were incorporated over time and are now all in effect. More specifically for this article, the changes give rights to adjudicate for non-payment. Here are 12 things that you should know about paying for building repairs.
1
Building repairs that are not normal “maintenance”, like servicing equipment or landscaping, are included in the provisions of the Act. Most importantly, nobody can contract out of the payment provisions in the new Act.
2
The prompt payment provisions in the new Act are triggered by a “proper invoice”. To qualify as a proper invoice, it can have previously mandated enclosures, like WSIB verification and certain declarations, but it can not require certification by a third party – such as your engineer.
3
Once you get a “proper invoice” you have 28 days to pay undisputed amounts. Disputed amounts can be withheld but proper notice of disputed amounts must be given within 14 days of receiving the proper invoice specifying which amounts are in dispute and why. Undisputed amounts must still be paid by 28 days. The general contractors are required to pay subcontractors by 7 days afterward and they the sub-subcontractors within another 7 days. The objective is to move the funds from the payor to the hands of the people that did the work.
4
The “proper invoice” goes to the owner – not the payment certifier/engineer. If there is a payment certifier/engineer, the owner may pass it along to the engineer
to review/certify; but any delays in certification, do not suspend the payment clock. In this regard, it makes sense for the contractor to submit a draft invoice to the payment certifier/engineer for review, adjustment, and agreement before the contractor submits a “proper invoice” to the owner/payor. Just to be clear, payment is required in 28 days. That is not when the treasurer returns from vacation, not when the management company chooses to do cheque runs, and not when the Board schedules its next meeting.
5
These provisions have been in place for all contracts after October 2020. However, the transition from the old payment regime to the new one may not necessarily be triggered even if the contract was signed after October 1, 2020. If, for example, you put out a call for bids in March 2020 but did not sign a Contract until afCONDOVOICE SPRING 2022
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