Prompt payment and dispute resolution reforms are changing how construction project participants are to be paid, their disputes determined and when liens are to be filed and holdbacks released.
Overview of Recent Changes
Prompt payment and interim adjudication regimes are already in force in Ontario and Alberta.
Ontario, the first province to implement prompt payment and adjudication regimes for construction projects, is continuing to refine the regimes, including by requiring a mandatory annual release of accrued holdback regardless of contract price or length of contract, and clarifying and expanding certain elements of the regimes.
Alberta has also implemented prompt payment and adjudication regimes. Recent changes in Alberta clarify that when a regulated professional engineer or regulated professional architect waives their lien rights, they are now also waiving any requirement for the owner to maintain a statutory holdback for their services. Further, while not the focus of this article, amendments were also made to the Public Works Act (Alberta) in April 2025 to incorporate prompt payment and adjudication provisions.
British Columbia's prompt payment and adjudication regimes have received Royal Assent but are not yet in force. Once the Construction Prompt Payment Act and the amendments to the Builders Lien Act come into force, there will be greater consistency in the legislative regimes across Alberta, British Columbia and Ontario.
British Columbia will have similar requirements to Alberta and Ontario in respect of "proper invoice" requirements for contractors, payment timelines among owners, contractors, subcontractors and sub-subcontractors, and the resolution of various construction disputes by way of adjudication.
The upcoming prompt payment and adjudication regimes in British Columbia are discussed in detail in our insight BC Introduces Prompt Payment Legislation issued on October 28, 2025.
View our at‑a‑glance comparison chart to quickly see how Alberta, BC, and Ontario stack up on prompt payment requirements.
Ontario: Construction Act
Ontario's prompt payment and adjudication regime came into force on October 1, 2019. Additional major amendments came into force as of January 1, 2026 relating to the statutory framework for release of accrued holdbacks, private adjudication, and "proper invoices."
Mandatory Annual Release of Holdback
Due to the amendments, Ontario is now the first province in Canada to require that the 10% accrued statutory holdback be released annually on all construction contracts, irrespective of the duration of the completion schedule or the contract price, and regardless of whether the contract states that the accrued holdback is to be paid on an annual basis on the anniversary date of the contract.
Only construction contracts that have a special purpose entity (SPE) are exempted from this requirement, as such contracts will have the holdback amount determined by agreements between the SPE and contractor. While the scope of the SPE exemption is currently unclear, it is likely to be narrow.
As a result, industry participants may wish to update and revise standard form contracts to account for the requirements of the amendments. Owners may also wish to consider process/procedure changes to prepare for the new mandatory annual release of holdback in their payment processes (subject to the transition process discussed below).
Owners and contractors alike should also be aware that under the Construction Act, not later than 14 days after each applicable anniversary day of the contract, the owner is required to publish a notice of annual holdback release using the prescribed form, which is Form 6.
Form 6 must be published on a construction trade news website, which may be one of The Daily Commercial News, Link2Build and Ontario Construction News. The Form requires the owner to set out when the owner intends to pay the annual holdback, and the amount of annual holdback payment.
Unless a lien has otherwise been preserved or perfected, the annual holdback amount must then be paid by the owner to the contractor at least 60 days, but not later than 74 days, after the date the notice of annual release is published.
The contractor is then required, not later than 14 days after receiving the annual holdback payment, to pay the applicable subcontractors' accrued holdback. These obligations flow down the construction pyramid—upon a subcontractor receiving its annual holdback payment, the subcontractor will have not later than 14 days to provide payment to its sub-subcontractors.
Transition
For contracts entered into prior to January 1, 2026, the "relevant anniversary day" for purposes of the annual holdback release regime will be the second anniversary date of the contract that falls after January 1, 2026. For example, if a contract is dated December 15, 2025, the relevant anniversary date in respect of which the first annual release of holdback is to be calculated and paid will be December 15, 2027, being the second anniversary date.
Prompt Payment Timeline
Under the Construction Act (Ontario), it is important to note that "proper invoices" have to be given to an owner on a monthly basis, unless the contract provides otherwise.
- Owner → Contractor: Payment due within 28 days after receipt of a "proper invoice", unless a notice of non-payment is validly served within 14 days.
- Contractor → Subcontractor: Upon receiving payment from the owner, contractor must pay subcontractors within 7 days; if the owner does not pay some or all of a "proper invoice", the contractor must, no later than 35 days after giving the proper invoice to the owner, nonetheless pay each subcontractor who supplied services or materials under a subcontract with the contractor that were included in the "proper invoice" the amount payable to the subcontractor.
- Subcontractor → Subcontractor: Upon receiving full payment from a contractor, a subcontractor must pay each subcontractor within 7 days; if no contractor payment is received by subcontractor, subcontractor must nonetheless pay the sub-subcontractors within the statutory fallback timeline, which is 42 days after the "proper invoice" was given to the owner.
Proper Invoice Requirements and 2026 Changes
The amendments include additional requirements and clarifications regarding what constitutes a "proper invoice" under the Construction Act.
Following the amendments, a "proper invoice" must include eight elements. Updated language is italicized.
- The contractor’s name and address.
- The date of the invoice and the period, milestone or other contractual payment entitlement to which the invoice relates.
- Information identifying the contract or other authorization under which the services or materials were supplied, such as a contract number, contract line item number or purchase order number.
- A description, including quantity where appropriate, of the services or materials that were supplied.
- The amount payable for the services or materials that were supplied, and the payment terms.
- The name, title, mailing address and telephone number of the person to whom payment is to be sent or, if payment is to be sent to an office or department, its name, mailing address and telephone number.
- Any other information that is necessary for the proper functioning of the owner’s accounts payable system that the owner reasonably requests.
- Any other information that may be prescribed.
"Proper invoices" cannot be made conditional on prior certification or approval (except in limited cases, such as where there is a provision in a contract that calls for testing and commissioning of the improvement or of services or materials supplied). Importantly, where a contract requires milestone payments, the amendments now require the invoice to make reference to the milestone.
Following numerous disputes, both in adjudication and in court, over whether an invoice qualifies as a "proper invoice", Ontario has also implemented a deeming provision, such that an invoice that does not meet the statutory criteria is deemed to be a "proper invoice", unless the owner raises the deficiency in writing within seven days of receipt, and states what is required to address the deficiency.
Due to this change, owners may wish to consider implementing appropriate processes and procedures to ensure timely review of contractor invoices and the prompt issuance of notices of deficiency, if necessary.
Adjudication
The amendments expand the scope of adjudication, extend the timeline to commence adjudication and permit the use of private adjudicators. Adjudication determinations remain interim and binding, subject to judicial review, or subsequent litigation or arbitration.
Scope of Adjudication
From the outset, Ontario’s adjudication regime has had reasonably broad application, covering most payment disputes and other project-related disputes.
The scope of adjudication has been expanded to include a determination regarding any of the following, if reasonably necessary to resolve a dispute, or make a determination:
- The scope of work required to be performed under the contract.
- A request for a change in the contract price.
- A request for an extension of time in the completion of work required to be performed under the contract.
Extended Timeline to Commence Adjudication
Prior to the amendments, the right to commence adjudication expired after the contract or subcontract was completed, unless the parties agreed otherwise.
The amendments clarified and extended the timeline to commence adjudication. A claimant may now issue a notice of adjudication within 90 days after the date on which the contract is completed, abandoned or terminated, unless the parties to the adjudication agree otherwise.
Private Adjudicators
Prior to the amendments, all adjudications were administered by ODACC and required the use of an ODACC registry adjudicator.
Under the amendments, parties may instead use a private adjudicator (who must be qualified by ODACC), if:
- there is a written agreement signed by the parties and the adjudicator that discloses the terms applicable to the adjudication and the adjudicator fee to which they have agreed; and
- the adjudicator fee amounts to an hourly rate of at least $1,000, regardless of how it is charged.
Alberta: Prompt Payment & Construction Lien Act
In Alberta, the Prompt Payment & Construction Lien Act (PPCLA) came into force on August 29, 2022, and brought in a prompt payment and adjudication regime. That regime also became applicable to public works under the Public Works Act (Alberta) (PWA) effective April 1, 2025. However, those 2025 amendments are not the focus of this article. Effective November 26, 2025, a minor amendment was made to the Prompt Payment and Adjudication Regulation (PPAR). Specifically, while regulated engineers and architects could already waive their rights to enforce liens under the PPCLA, Alberta's PPAR was amended to clarify that such a waiver also constitutes a waiver of their rights to the associated statutory holdback and the owner is released from its obligations to maintain the holdback.
Prompt Payment Timeline
In Alberta, the following prompt payment timelines apply.
- Owner → Contractor: Owner must pay a "proper invoice" within 28 days of receipt.
- Contractor → Subcontractor: Contractor must pay subcontractors within 7 days of receiving payment from the owner.
- Subcontractor → Sub-Subcontractor: Subcontractor must pay sub-subcontractors within 7 days of receiving payment from the contractor.
If payment is not received by a contractor from the owner, the contractor nonetheless has to pay its subcontractors in full within 35 days after giving the "proper invoice" to the owner, and the subcontractor has to pay each sub-subcontractor in full within 42 days of the "proper invoice" issuance unless a notice of non-payment is served and an undertaking is made to refer the matter to adjudication within 21 days.
Proper Invoice Requirements for Contractors
Under Alberta's PPCLA, a contractor's “proper invoice” must include mandatory information such as the contractor's name and business address, the date of the "proper invoice" and the period during which work was done or materials were furnished, information identifying the authority, whether in a written or verbal contract under which the work was done or the materials were furnished, a description of the work done or materials furnished, the amount requested for payment and the corresponding payment terms broken down for the work done or materials furnished, and the name, title and contact information of the person to whom payment is to be sent. In Alberta, it is also essential that the contractor's invoice clearly states that it is intended as a "proper invoice."
Additionally, a "proper invoice" must be given to an owner at least every 31 days unless there is a provision within the contract that requires testing and commissioning of the work or materials furnished.
Adjudication Regime
Like Ontario, Alberta's PPCLA enables parties to initiate adjudication to resolve certain disputes, including:
- the valuation of services or materials provided under the contract or subcontract, including in respect of a written change order, whether approved or not, or a proposed change order, as the case may be;
- payment under the contract or subcontract, including in respect of a written change order, whether approved or not, or a proposed change order;
- disputes that are the subject of a notice of non-payment;
- payment or non-payment of an amount retained as a major lien fund or minor lien fund and owed to a party during or at the end of a contract or subcontract, as the case may be; and
- any other matter in relation to the contract or subcontract, as the case may be, that the parties in dispute agree to, regardless of whether or not a "proper invoice" was issued or the claim is lienable.
In Alberta, a notice to adjudicate must be provided within 30 days of final payment under the contract or subcontract (unless the parties to the adjudication otherwise agree).
Adjudicators are certified by Nominating Authorities, which at this time is the Alberta Dispute Adjudication for Construction Contracts (ADACC). Adjudicators issue determinations that are binding unless they are overturned. In this sense, nothing prevents the authority of the court or an arbitrator from considering the merits of a matter determined by an adjudicator.
Similar to Ontario, in order to be qualified as an adjudicator in Alberta, one must have at least 10 years of relevant working experience in the construction sector. However, in addition to experience in the construction sector, the individual has to have sufficient knowledge and experience in dispute resolution, contract law, legislative interpretation, determination writing, ethics, jurisdiction and the adjudication process. A certificate of qualification is only valid for the period specified within it, to a maximum of 3 years.
Timeline to File Liens
In Alberta, the timeline to file most liens is 60 days from the date of the issue of a certificate of substantial performance of the contract, or if the certificate of substantial performance is not issued, the date of the completion of the contract. The exceptions are 90 days where concrete is furnished as a material of work done, or if improvements are made to an oil or gas well or oil and gas well site where a lien may arise.
Alberta's November 2025 Update
Building on previous amendments that impacted regulated professionals who act in a consultative capacity with respect to an improvement to land, there has been a complimentary change to Alberta's Prompt Payment and Adjudication Regulation. While Alberta's PPCLA permitted professional engineers and professional architects to waive their lien rights under section 5 of the PPCLA, there was no mention in the PPCLA as to how that waiver impacted the owner's statutory holdback requirements in respect of the major and minor lien funds. This issue has now been rectified through the introduction of section 35.1 in the PPAR. This is an important change, which clarifies that should an architect or engineer elect to waive their lien rights under the Alberta PPCLA, the owner does not have to withhold and maintain the statutory holdback amounts.
In Alberta, regulated engineers and architects need to carefully consider, when entering into contracts with owners, whether from a cost benefit perspective waiving their lien rights and not being subject to the 10% holdback is more beneficial to them than not being able to file a lien if they are not paid. Additionally, owners and contractors need to be made aware of any waivers, given that it impacts the calculation of the major and minor lien funds.
While the Government of Alberta has provided an example waiver that regulated engineers and architects may elect to utilize in their contracts, given the significance of a lien waiver, it is important to consider the contract as a whole and ensure that the waiver is consistent with other contractual provisions including the holdback provisions.
British Columbia: Construction Prompt Payment Act (Proposed Changes)
Note that this legislation is not yet in force.
British Columbia's proposed prompt payment legislation, the Construction Prompt Payment Act (CPPA), received Royal Assent on November 27, 2025 and will come into force once regulations and transition periods are set, which we expect to see sometime in 2026, although the government has not formally announced when it anticipates this will occur.
Proposed Prompt Payment Timelines
In British Columbia, contractors will need to submit "proper invoices" monthly (unless the relevant contract states a different period of time or provides for a proper invoice on the achievement of a milestone or another basis).
Similar to Ontario, invoices will be considered "proper invoices" if they include the following items:
- the name and address of the contractor,
- the date of the invoice,
- the period of time, milestone, or other basis to which the invoice relates,
- information identifying the contract or other authorization under which services or materials were supplied, such as contract number, contract line item or purchase order number,
- a description, including quantity if applicable, of the services or materials supplied,
- the amount payable for the services or materials that were supplied and the payment terms,
- the information specified in the contract relating to how payment is to be made or, if none is specified, the name of the person or office to which payment is to be sent, and
- any other information required by the applicable contract.
In British Columbia, as is the case with Ontario, there will be no requirement, as there is in Alberta, for the invoice to accompany a statement that itis intended to be a "proper invoice."
In line with the regime in Ontario, in British Columbia a contractor's invoice will be deemed to be a "proper invoice" unless, within 7 days of the invoice date, the owner provides written notice to the contractor stating (a) that the invoice does not meet the requirements of a "proper invoice" in the legislation, and (b) what is required to bring the invoice into conformance with those requirements.
Following the issuance of a proper invoice, payments must be made promptly as follows:
- Owner → Contractor: The owner must pay the contractor within 28 days of the "proper invoice" date unless a notice of non-payment is properly issued by the owner (as will be discussed further below).
- Contractor → Sub-tiers: Contractors and subcontractors must pay the next tier below them by the earlier of (a) 7 days after receiving payment from the entity immediately above them in them in the contractual chain, or (b) a "calculated payment date" equal to the sum of 28 days and the product of 7 and the person's "contract position". Under British Columbia's CPPA, for the purposes of calculating the person's "contract position", the CPPA provides that the position of the owner is "0", the position of the contractor is "1", and the position of a subcontractor is the number of persons before the subcontractor in the chain. Thus, a person's "calculated payment date" for a "proper invoice" is the number of days after the invoice date that is equal to the sum of 28, and the product of 7 and the "person's contract position".
In practice, this means that payments on "proper invoices" must be made as follows:
| Owner | Contractor | Subcontractor | Sub-subcontractor |
| Position 0 | Position 1 | Position 2 | Position 3 |
| Must pay contractor within 28 days after the invoice date | Must pay its subcontractor by the earlier of (i) 7 days after receiving payment from the owner, or (II) within 35 days of the invoice date. | Must pay its sub-subcontractor by the earlier of (i) 7 days after receiving payment from the contractor, or (ii) within 42 days of invoice date. | Must pay its sub-sub-subcontractor by the earlier of (i) 7 days after receiving payment from the subcontractor, or (ii) within 49 days of invoice date |
| 28 + (0 x 7) = 28 days | 28 + (1 x 7) = 35 days | 28 + (2 x 7) = 42 days | 28 + (3 x 7) = 49 days |
Notice of Non-Payment
Under British Columbia's CPPA, each party in the contractual chain (owner, contractor, subcontractor) must provide written prescribed notices of non-payment within strict timing if they wish to withhold some or all of any payment on a proper invoice. In addition, the person must specify the amount and reasons for non-payment.
Importantly, if an amount is not being paid by a party in the chain of contractors because of a notice of non-payment received higher up in the chain of contracts (e.g., a contractor is withholding payment to a subcontractor on account of the fact that the contractor has received a notice of non-payment from the owner), it is crucial that the party withholding payment provide (a) a copy of any notice of non-payment given to the withholding party, and (b) an undertaking to refer the prior non-payment to adjudication within 21 days after the notice is given.
In the case of a notice of non-payment given by an owner, notice must be given to the contractor within 14 days of the "proper invoice" date.
In the case of a notice of non-payment given by a contractor or subcontractor further down the contractual chain, a notice of non-payment must be given within the earlier of (a) 7 days after the person receives a notice of non-payment from the entity above it in the contractual chain, or (b) the person's calculated payment date for the invoice (i.e., the sum of 28 days and the product of 7 and the person's contract position, as described above).
In practice, this means that notices of non-payment must be issued as follows:
| Owner | Contractor | Subcontractor | Sub-subcontractor |
| Position 0 | Position 1 | Position 2 | Position 3 |
| Notice of Non-Payment must be issued within 14 days after the invoice date. | Notice of Non-Payment must be issued by the earlier of: (i) 7 days after the owner has issued its Notice of Non-Payment, or (ii) within 35 days of the invoice date. | Notice of Non-Payment must be issued by the earlier of: (i) 7 days after the contractor has issued its Notice of Non-Payment, or (ii) within 42 days of the invoice date. | Notice of Non-Payment must be issued by the earlier of: (i) 7 days after the subcontractor has issued its Notice of Non-Payment, or (II) within 49 days of the invoice date. |
| 28 + (0 x 7) = 28 days | 28 + (1 x 7) = 35 days | 28 + (2 x 7) = 42 days | 28 + (3 x 7) = 49 days |
Interim Adjudication
Similar to Ontario and Alberta's prompt payment legislation, British Columbia's CPPA also incorporates an adjudication regime to fast track the resolution of certain construction disputes.
BC's adjudication regime will be available for disputes relating to:
- A failure to give a "proper invoice";
- Whether an invoice is a "proper invoice";
- A failure to make payment required under the CPPA;
- A notice of non-payment, including, without limitation, whether a holdback under the Builders Lien Act applies in relation to an amount retained as a holdback;
- The valuation of a service or materials supplied under a contract;
- Whether a payment is required under a contract, including, without limitation, in relation to a change order, whether approved or not, or a proposed change order;
- Any other agreed matters; and
- Any other prescribed matters.
In essence, this means that virtually any kind of construction dispute could be subject to BC's adjudication process, as virtually all kinds of construction disputes could fall within the ambit of the above-described categories.
The only limitation in respect of the adjudication process is that an adjudication may not be commenced more than 90 days after the following dates:
- in the case of a dispute relating to a contract between an owner and a contractor, the date the contract is completed, abandoned or terminated, or
- in the case of a dispute relating to a subcontract, the earliest of (a) the date the contract between the owner and contractor is completed, (b) the date the subcontract is certified as completed under the Builders Lien Act, or (c) the date the subcontractor last supplies services or materials under the subcontract.
Any party to a construction contract may refer a dispute to adjudication by giving to the other party to the contract a written notice of adjudication. Thereafter, the adjudication must proceed very quickly. An adjudicator must be appointed within 11 days of the commencement of the adjudication, and a decision must be issued by the adjudicator within just 35 days of the adjudicator's appointment, meaning that the adjudication must conclude within a maximum of 46 days from the start of the adjudication.
The determination made by an adjudicator will be binding and must be paid within 15 days of the adjudicator's determination, failing which the determination may be enforced by the Supreme Court of British Columbia and work on a project may be suspended.
A party to an adjudication may seek to overturn the determination made by an adjudicator in subsequent court or arbitration proceedings. However, the adjudicator's determination is binding while such proceeding is pending. In practice, this means that the amounts ordered paid by an adjudicator must still be paid within 15 days of the adjudicator's determination, and a party may seek to claw those payments back in a subsequent court or arbitration proceeding.
Another similarity with Ontario is that under British Columbia's CPPA, the adjudicator may either be selected by the parties or appointed by an adjudication authority.
At this time, there is no information within British Columbia's CPPA how the process of selecting a private adjudicator will be regulated, and if there will be a certification process.
Lien Law Changes
BC's CPPA also makes a number of amendments to the Builders Lien Act in BC. The most important of these is the express abolishment of the concept of Shimco liens in BC, which previously allowed parties to file liens against a holdback. Moving forward, it will no longer be possible to file a separate lien against a holdback. Additionally, upon the CPPA's coming into force, the Builders Lien Act will be amended such that the statutory holdback period will be reduced from 55 to 46 days. This is a development that owners and contractors must keep aware of, as this will allow the release of a holdback a day after the lien filing deadline expires.
Application and Potential Exemptions
Once in force, British Columbia's CPPA will apply broadly to construction projects in British Columbia. However, the CPPA expressly recognizes that exemptions may be set out in future regulations relating to different sectors of the construction industry or different classes of public or private projects. It is anticipated that these exemptions may apply to certain mega-projects with capital expenditures over certain monetary thresholds and/or public works. Further, the CPPA expressly recognizes that it may be introduced gradually in phases. Industry stakeholders are closely watching upcoming regulation drafts, and there may be an opportunity for industry stakeholders to provide feedback and comment upon such drafts before they are finally implemented.
Until the CPPA and Builders Lien Act (British Columbia) amendments are in force, the current lien regime under the Builders Lien Act (British Columbia) will continue to apply, as set out in the comparison chart.
Prompt Payment and Adjudication Between Alberta, British Columbia and Ontario
With British Columbia's Bill 20: Construction Prompt Payment Act having received Royal Assent on November 27, 2025, Alberta, British Columbia and Ontario will soon have similar prompt payment and adjudication legislation in place.
For example, there is uniformity in the need for contractors to ensure that their invoices comply with the requirements of "proper invoices" and that strict payment deadlines are followed. One example is how British Columbia's CPPA requires owners, contractors and subcontractors to make payments of "proper invoices" in accordance with their contractual position, that has an assigned value.
Unlike British Columbia and Ontario, only Alberta will require "proper invoices" to explicitly state that they are intended to be "proper invoices." Alberta does not have a deeming invoice provision and does not allow private adjudicators to determine disputes.
It remains to be seen in the future if Alberta and British Columbia will follow Ontario and make mandatory the annual release of holdback irrespective of contract duration or contract price. Drafters of construction contracts with projects in Alberta, Ontario and British Columbia should be mindful of the adjudication dispute resolution processes and how they will apply in the context of negotiated dispute resolution clauses in prompt payment legislation. Adjudication is a key component that offers swift resolution and efficiency when resolving construction disputes.
If you have any detailed questions or require tailored advice on how prompt payment, adjudication and construction lien matters can affect your project, please contact one of the members of our Construction Law practice group.
