On October 7, 2025, the provincial government introduced Bill 20 – 2025 Construction Prompt Payment Act (the “Proposed Act”). The Proposed Act is not yet in force and will come into effect by regulation at a later date. However, it represents a significant step toward implementing prompt payment legislation in British Columbia which has been anticipated for several years.
The Proposed Act introduces several notable features establishing requirements for prompt payment, adjudication, enforcement, and transitional provisions, including phased implementation across different sectors of the construction industry:
- Scope of application: The Proposed Act would apply to the supply of services or materials for an “improvement” (essentially, a building project) under a contract, subject to certain prescribed exceptions yet to be defined.
- Proper invoices: Contractors would be required to deliver a “proper invoice” monthly, or on another agreed schedule. These invoices must include specific information outlined in the Proposed Act.
- Payment timelines: Owners must pay a proper invoice within 28 days unless it is disputed in accordance with the prescribed procedure. Contractors and each subcontractor in the payment chain must, in turn, pay the party below them within seven days of receiving payment from the party above.
- Transparency: Subcontractors would have the right to request information from contractors regarding invoicing timelines and the dates invoices are rendered.
- Interest on late payment: Interest would accrue on amounts not paid in accordance with the Proposed Act.
- Adjudication: The Proposed Act prescribes adjudication procedures for disputes concerning invoicing, payment, or the valuation of services or materials supplied under a contract.
- Enforcement: Adjudicators’ determinations could be enforced through rights to cease work or by registering the determination as a judgment of the Supreme Court of British Columbia.
- Transitional provisions: Pre-existing contracts entered into before the Proposed Act comes into force would be exempt. The Proposed Act also permits phased implementation across construction sectors.
In addition to introducing prompt payment legislation, Bill 20 also proposes several important amendments to the Builders Lien Act, including:
- Abolition of the Shimco or holdback lien: In Shimco Metal Erectors Ltd. v. North Vancouver (District), 2003 BCCA 193, the Court of Appeal confirmed that the Builders Lien Act, SBC 1997, c. 45 (the “Builders Lien Act”) creates both a lien against the land and improvements and a right against statutory holdbacks retained by owners, contractors, and subcontractors. This decision has been criticized as introducing unnecessary complexity and procedural hurdles. The Proposed Act proposes to insert a new section into the Builders Lien Act expressly stating that no lien may be claimed against statutory holdbacks.
- Shortened holdback period: Currently, the Builders Lien Act requires holdbacks to be retained for 55 days, while lien claims must be filed within 45 days of the triggering event. The 10-day gap has been widely criticized as unnecessary. The Proposed Act proposes to shorten the holdback period to 46 days, aligning it more closely with the 45-day lien deadline.
- Demolition work lienable: The current definition of “improvement” in the Builders Lien Act is broad but does not expressly include demolition. As a result, there has been some debate as to whether demolition work is lienable, particularly after a prior decision finding demolition work lienable was overturned on unrelated grounds.
The Proposed Act proposes to amend the definition of “improvement” contained in the Builders Lien Act to expressly include demolition as lienable work.
The proposed changes to the Builders Lien Act are sensible and have been anticipated for several years. However, there are conflicting views on the desirability of prompt payment legislation, particularly from those higher up the payment chain who argue that it may increase administrative and compliance costs.
If you have any questions about upcoming prompt payment legislation or any general construction disputes needs, please reach out to Mark Danielson at [email protected] or 250.869.1284.
