Prompt Payment Legislation Arrives In British Columbia: What You Need To Know

After years of anticipation and industry advocacy, the British Columbia government has taken a significant step towards reforming payment practices in the construction sector. On October 7, 2025, the province introduced Bill 20, the Construction Prompt Payment Act, aimed at attempting to assist construction project participants with timely payment and provide an option for an efficient dispute resolution mechanism for contractors, subcontractors, and suppliers across BC's construction industry. This proposed legislation is intended to complement, not replace, the BC Builders Lien Act. The Bill includes proposed amendments to the Builders Lien Act, which we discuss below.

Delayed payments are one of the most common sources of tension and litigation in the construction sector. Bill 20 aims to reduce these delays by imposing strict timelines for payment and introducing a streamlined adjudication process for resolving disputes. If enacted, the legislation will apply to new contracts and subcontracts entered into after the law comes into force, following a phased implementation to allow the industry time to adapt.

The proposed legislation applies when a contractor supplies services or materials that contribute to an improvement to land or buildings under a contract, similar in scope to the type of work covered by the Builders Lien Act. While certain types of projects or contracts may be excluded, the proposed legislation is expected to apply to most conventional construction projects.

Bill 20 is modeled closely to prompt-payment laws already in place in other Canadian provinces, including Ontario's Construction Act. Similar to the Builders Lien Act, once enacted and brought into force, for those projects or improvements that the new Act will apply to, parties will be unable to contract out of the requirements of the Construction Prompt Payment Act. The following are some key features you should be aware of:

• Mandatory Payment Deadlines: Owners must pay contractors within 28 days of receiving a "proper invoice". Contractors then have 7 days to pay subcontractors, and so on down the chain. Holdback requirements will continue to apply to all payments.
• Proper & Regular Invoicing Requirements: Bill 20 defines what constitutes a "proper invoice," which will be critical for owners, contractors, subcontractors and suppliers to understand and, once the legislation is enacted, to adapt their invoicing and payment protocols to ensure compliance with the new requirements. The Bill provides that unless the parties agree otherwise, contractors are required to submit a proper invoice to the owner on a monthly basis.
• Adjudication Process: Bill 20 introduces a fast-track adjudication system for resolving payment disputes while a project is still underway. This process is intended to provide a quicker and less costly mechanism for resolving mid-stream project disputes as compared to traditional litigation, with decisions being binding on an interim basis.
• New Adjudication Authority: B.C. will establish a body to oversee adjudications, similar to Ontario's ODACC. This authority will appoint and train adjudicators and manage the dispute resolution process.

One of the most significant changes introduced by Bill 20 is an amendment to the Builders Lien Act that abolishes the Shimco lien, which is a separate lien against the statutory holdback that has existed in BC alongside the traditional lien against land and improvements since the 2003 decision of Shimco Metal Erectors Ltd. v. Design Steel Constructors Ltd.. The Shimco lien, which we examine in detail in a separate article, has faced longstanding criticism within the construction industry due to its ambiguity and procedural complexity. Its removal is expected to simplify lien enforcement and reduce confusion surrounding holdback administration.

In addition, the Bill proposes a few other amendments to the Builders Lien Act, including:

• reducing the holdback period from 55 days to 46 days.
• expanding the definition of "improvement" to expressly include demolition or removal of improvements.

Although Bill 20 is not yet in force, project participants can begin preparing by:

• Reviewing contract templates to ensure that they align with the new invoicing and payment requirements.
• Educating managers and accounting teams on proper invoicing procedures.
• Consulting legal counsel to understand how the adjudication process may affect ongoing or future disputes.
• Monitoring updates from the government regarding the transition timeline and establishment of the adjudication authority.

Prompt payment legislation is a welcome development for many in the industry, but it also introduces new compliance obligations and potential risks. Project participants that proactively adapt to the new framework will be better positioned to avoid disputes and protect their financial interests.

While Bill 20 has been introduced, its final form and effective date remain to be determined. Further regulations and guidance are expected, and stakeholders should monitor developments closely to ensure compliance once the legislation is enacted.

We will be monitoring the progress of Bill 20 and will update this article when more information becomes available. Our firm has an experienced group of construction law practitioners who are available to provide advice on dealing with complex payment and builders lien and related issues that may arise on construction and infrastructure projects.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.