Canada in the News: Securing Receivables in Canada
This week we shared some great articles about securing receivables in Canada; here’s a quick look at what you may have missed!
- In Quebec, a remedy available to the construction industry is the “legal hypothec” more commonly known as a mechanic’s lien in the U.S. In “The Legal Construction Hypothec: a Security Whose Validity Depends on Both Formality and Substance” the author addresses two recent court decisions.
Two Takeaways from this Article
If you, as the owner on a construction project, are going to motion that a lien claimant’s claim be dismissed and/or reduced, make sure you following the statutory requirements for that motion.
“… The Superior Court…dismissed the first motion. In doing so, it confirmed a long line of cases holding that a motion seeking the cancellation of the registration of a hypothec, as provided in Article 804 CCP, must be in the form of a motion to institute proceedings. Thus, this article does not permit a preliminary motion challenging the validity of a secured claim, including its amount.”
If you are going to supply materials and/or labor to a construction project, large or small, make sure you have the proper contractor’s license. The creditor’s hypothec was cancelled on a “technicality”:
“Invalid contractor’s licence: T&T held only a contractor’s licence “for small buildings”. While the owners’ house was assembled from a kit of pre-fabricated components, the Court nonetheless concluded that a licence for small buildings was not sufficient and that T&T should have held a contractor’s licence “for new buildings covered by a guarantee plan”.”
Ontario has been tossing around prompt pay statute for the last few years. Originally known as “Bill 69” this prompt pay statute is now referred to as “Act Respecting Payments Made Under Contracts and Subcontracts in the Construction Industry (Prompt Payment Act)”. In “Toronto Politicians to Consider Submissions on Ontario Construction Lien Act Review” the author provided a nice concise list of the items under review, including the desire for “mandatory labour and material payment bonding of all public projects”
Be sure to also check out: “Lien Bonds, Building Contractors’ Trust Funds are Two Separate Remedies in Manitoba: Supreme Court of Canada” and “Appeal Dismissed – 18 September 2015: Liens-Trusts – Relationship between Lien and Trust Provisions in Provincial Legislation” both discuss the same case presented to Manitoba Supreme Court, in which the Court determines whether or not liens and trusts are truly two separate remedies available to the construction industry.
A third article, “Court Issues Significant Ruling on Construction Trusts”, addresses the clash of the Builder’s Lien Act and the Bankruptcy Insolvency Act, which came before an Alberta Court. This author makes a charmingly accurate, albeit obvious, observation “… if everyone is solvent, nobody cares about trusts, secured interests or priorities. If everyone is solvent, nobody cares about builder’s liens either.”
It should come as no surprise that lien waivers are a HOT topic in the construction industry – as they should be. Lien waivers, when not executed properly, can have devastating consequences. This week we discussed the price tag that accompanies the careless management of lien waivers. Be sure to read “Carelessness is Worse than a Lien-Waiver-Gauntlet-Throwing-Thief” to learn how one subcontractor made a careless mistake and which subsequently vacated the sub’s mechanic’s lien.
In keeping with our mini-trend on securing receivables in Canada, learn more about the PPSA in this week’s infographic: Secure Receivables in the U.S. and Canada – the UCC v. PPSA. Interested in a PDF version of this infographic? Send us a quick note by clicking here & we’ll get a copy over to you ASAP!
NCS Fall Seminars – Coming to Texas
Dallas & Houston, we are coming your way to discuss the UCC process and how it offers you protection in the event of a bankruptcy or default AND the Mechanic’s Lien and Bond Claim Process and how it can secure your right to get paid when extending credit on construction projects
Learn more here!
NCS offers a variety of awesome (and FREE)! Make sure you check ‘em out!