New Alberta law requires homeowners to pay contractors on time

After years of advocacy by the construction industry, Alberta now has legislation in place to help contractors and subcontractors get paid on time.

The province’s new Prompt Payment and Construction Lien Act aims to address inflated wait times for payment on construction contracts, Service Alberta Minister Nate Glubish said.

Over the years, Glubish said the average payment term for a contract has gone from 40 days to 75 days. Sometimes contractors and subcontractors had to wait more than three months to get paid for their work, Glubish said.

« What we’ve had here in Alberta so far has been the Wild West, » Glubish told CBC Calgary. « Now that we have a clear set of rules, everyone is going to play by the same rules, and I am cautiously optimistic that we will be in a very good position going forward. »

The new law, formerly known as the Builders’ Lien Act, requires owners to pay contractors within 28 days of receiving an invoice.

Once paid, contractors in turn have seven days to pay their subcontractors.

If things go wrong, the law also outlines an arbitration process for industry players as a more accessible and less costly alternative to going to court.

Terry Milot, president of the Alberta Trade Contractors Council, sees the changes as a good step. His group has been pushing for prompt payment legislation since 2014.

« When entrepreneurs know they’ll be paid on time, they can really plan their business, their work, » Milot said. « They can hire more people, they can start apprenticeships, if they know they have stability of when they’re going to get paid. »

« I have no cash reserves » to waive payment

Calgary Construction Association President Bill Black also applauded the new rules. Black said slow payments are a major problem for commercial contractors who, although working on large projects, are often very small businesses themselves.

« They don’t have huge cash reserves…they don’t necessarily have an in-house department that can go after unpaid bills, and they certainly don’t have the resources to resort to legal means if things go wrong. really bad, » said Black, who is also the association’s chief operating officer.

Although Black thinks the new law will help, he said it’s not a « quick fix ». He and Milot pointed out that provincial legislation does not apply to provincial government projects.

« I think it’s a huge discrepancy and a bit of a contradiction, » Black said.

Glubish said provincial contracts are already all covered by the Public Works Act.

In a statement, a spokesman for the infrastructure minister said the province had a track record of paying bills within 30 days.

“We continue to work to ensure Albertans receive compensation for their work quickly and efficiently,” the spokesperson said.

The Prompt Payment and Construction Lien Act applies to all private construction contracts in Alberta that were created on or after August 29, 2022.

Existing projects that will continue for more than two years have until August 29, 2024 to comply with the new rules.