Alberta’s prompt payment act now in force

PHOTO: Adobe Stock/Zolnierek

Alberta’s legislation mandating owners to provide payment to their contractors within 28 days of receiving a proper invoice for construction services and requiring contractors who receive payment from an owner to subsequently pay their subcontractors within seven days is now in force.

Formerly known as the Builder’s Lien Act, the Prompt Payment and Construction Lien Act creates rules for the timing of payments and sets out a streamlined adjudication process for disputes related to payment or work performed as an alternative to court.

The new act applies to all private construction contracts in Alberta created on or after August 29, 2022. Current contracts that extend past two years must become compliant with the new rules by August 29, 2024.

“Albertans in the construction industry have been advocating for prompt payment legislation for nearly 10 years, so I am excited to celebrate this important milestone,” stated Nate Glubish, Minister of Service Alberta. “I am proud of the work that Alberta’s government did, collaborating over the last three years with members of the construction industry to develop and pass legislation that will protect jobs and unlock cash flow in this multibillion-dollar industry that employs hundreds of thousands of Albertans.”

“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,” added Terry Doucette, senior vice-chair of the Alberta Construction Association. “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 the past legislation.”

www.alberta.ca