OGMA seminar updates members on Prompt Payment developments
Jan. 26, 2017 - Ontario Glass and Metal Association members met at the Richmond Hill Country Club on Jan. 18 to hear an update on the Reynolds Report from Geza Banfai, a construction law expert from McMillan LLB. The Reynolds Report was presented to the Ontario government last year. It contains a comprehensive review of the state of construction payment law in Ontario and many recommendations for change. Frank Fulton, seminar organizer and OGMA director, prepared this overview of the talk’s highlights.
I can't tell you how many times I've heard this said over the years: "The owner didn't pay me for the job so I slapped a lien on the building. At least I'll get paid someday when he tries to sell it."
WRONG! At our winter seminar, Geza Banfai, Counsel with McMillan LLP, set the record straight on this all too often misunderstood legal process. A glazing contractor or material supplier must take three distinct steps within specific time frames.
Step 1: Liens must be "preserved" by registration within 45 days from an objectively verifiable date. Assuming the glazing contractor or material supplier has contracted with a general contractor or someone below the general contractor in the contractual chain, that 45 days starts from the earlier of: publication of a certificate of substantial performance of the general contract; certification of completion of the subcontract; and the date of last supply to the improvement. A lien that is not preserved expires.
Step 2: The "preserved" lien must then be "perfected," which requires commencement of an action to enforce the lien and registration of a certificate of that action on title, both within 45 days of the last day upon which that lien could have been preserved. Again, if this is not done within time, the lien expires.
Step 3: "Perfected" liens expire unless an order is made for the trial of the action or the action that perfected the lien is set down for trial within two years of the date of commencement of the action. If this action is not taken within these two years, the lien expires and the owner can simply have the lien removed from the title of the premises.
CLA Review Recommendations: The preceding conditions are contained in the current Construction Lien Act. The Review is recommending extending the preservation period to 60 days and the perfection period to 90 days. They are not recommending an extension of the expiration period of two years.
Banfai told the audience of about 60 OGMA members that indications are the Attorney General will move swiftly to draft legislation based on these recommendations.
The OGMA is a member of Prompt Payment Ontario, an industry lobby group working to reform construction payment practices in the province.
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