For years, contractors, subcontractors, and suppliers across British Columbia have faced a common issue: delayed payments. Many would wait weeks, sometimes even months, to get paid for work they’ve already completed.
This is a major concern because the construction industry heavily depends on a steady cash flow.
To address these longstanding payment problems, BC has introduced the Construction Prompt Payment Act, which received Royal Assent in November 2025.
If you’re in the construction sector in British Columbia, knowing what this means for your work and how it may affect your contracts, payment timelines, and dispute resolution is important.
Here’s a Harbourview breakdown of everything you need to know about the Act.
Is the Prompt Payment Act Enforced Yet?
The Construction Prompt Payment Act is not yet operational as of the writing of this article. According to the Province of British Columbia, the legislation will be brought into force in phases as the Act’s regulations are finalized.
This is a common approach for governments when introducing major legislation.
This particular Act will impact thousands of projects, contracts, and payment arrangements in the region. Before it’s implemented, the BC government will first need to finalize regulations, designate an adjudication authority, and provide sufficient guidelines.
While the Prompt Payment Act won’t take effect overnight, people in construction should still prepare updated contract templates, payment procedures, and dispute processes for a smoother transition.
Owners, contractors, and subcontractors are urged to review their contracts carefully before the Prompt Payment Act is enforced.
Why British Columbia Introduced the Prompt Payment Act
Payment delays have been a longstanding problem in BC’s construction sector.
Surveys revealed that over 91% of companies experienced late payments for their construction services, and 69% reported having met clients who didn’t pay at all.
Because projects typically involve multiple parties, from contractors to owners and suppliers, slow payment can affect the entire chain, causing financial strain and operational difficulties for everyone.
Contractors and subcontractor companies, for one, need money to operate, pay their employees, purchase materials, maintain equipment, and cover other costs.
Without payment, projects slow down, and businesses struggle to meet their contractual obligations.
However, these concerns aren’t unique to British Columbia. Several provinces in Canada, including Ontario, Alberta, and Saskatchewan, have already enacted prompt payment legislation in response to similar issues.
In BC, the Prompt Payment Act is meant to encourage timely payment and revitalize cash flow in the province’s construction industry.
Understanding the Construction Prompt Payment Act
At its core, the Prompt Payment Act promotes fair and timely payment. It establishes a framework for managing construction fees once proper invoicing is delivered.
One essential aspect of the Act is that it no longer considers delayed payment as a problem solely between the owner and contractor.
Rather, it recognizes that payment holdups can seriously impact numerous businesses in the construction industry.
Instead of giving parties free rein over payment timelines, the idea is to present standardized rules that apply to the entire construction project chain.
By doing this, the Act promises to create greater certainty for everyone in the construction pyramid.
Who the Act Applies To and Who It Does Not
The legislation is designed to apply to construction contracts and those who enter into them. That means everyone in the industry’s supply chain, from property owners and contractors to subcontractors and suppliers.
Potential Exemptions and Exclusions
While the law is intended for broad application throughout the construction pyramid in BC, future regulations may still provide exemptions or exclusions for certain projects, services, or materials.
Additionally, it’s worth noting that the legislation may only apply to contracts you enter into after the Act comes into force.
Why Proper Invoices Matter Under the Act
One of the key concepts to understand in the Construction Prompt Payment Act in BC is the “proper invoice.”
A proper invoice marks the start of the payment process under the legislation. The timeline is tied directly to when the invoice is issued, and businesses seeking compensation must understand this.
What Qualifies as a Proper Invoice?
A proper invoice in British Columbia contains all the information required, as prescribed in the contract and the Prompt Payment Act. It typically provides details about the finished work and the amount being claimed.
In addition to defining proper invoices, the law also offers safeguards against delayed payments.
The legislation does this by limiting approval requirements. A contractor may issue an invoice without obtaining approval from a payment certifier or owner representative, and owners cannot delay payment due to a lack of such approvals.
You can check out this guide for information about what a proper invoice must include in British Columbia.
What Owners Must Do When They Dispute an Invoice
Apart from promoting prompt payment review, the provisions also include a process for addressing deficient claims from an invoice recipient.
An invoice will be considered proper and effective unless the owner notifies the sender of an issue.
If a property owner believes they received a deficient invoice from a contractor, they must send a notice within 7 days stating that the invoice is not proper. Outside that allotted timeframe, the invoice will be deemed proper under the Act.
Altogether, these provisions will help reduce uncertainty and unnecessary back-and-forth between parties.
For contractors, this means establishing a reliable invoicing procedure, including accurate documentation, preparing supporting information, and standardizing their invoice formats to avoid disputes.
On the other hand, property owners must implement clear and efficient invoice review processes to meet the allotted timeframe.
How the New Prompt Payment Timeline Works
This new construction law will introduce a structured and mandatory payment process. All parties who enter into an agreement after the legislation takes effect will have to abide by a standard timeline.
28-Day Full Payment Deadline
After receiving a proper invoice from their contractor, owners are required to pay within 28 days. This is unless they found an issue with the invoice or delivered a notice of non-payment within the applicable deadline.
Once the contractor is compensated in full, they’re then expected to pass payment down to their subcontractors or sub-subcontractors within 7 days.
By applying this cascading approach, the Act prevents fund holdups and improves certainty throughout the construction pyramid, not only at one level of a project.
What About Partial Payments?
It’s not uncommon for a property owner to experience financial difficulties and be unable to pay their obligations in full or on time.
In these cases, the Prompt Payment Act requires owners to deliver a notice of non-payment to their contractors within 14 days. Similarly, contractors must communicate this down to their subcontractors and sub-subcontractors.
For disputes involving a portion of the invoice, contractors may still receive payment for the undisputed amount. Disputed portions will be treated and adjudicated separately.
Does the Act Say Something About Holdbacks?
Holdbacks will continue to offer the same financial protection under the Builders’ Lien Act, even after the legislation is enacted. However, holdback obligations will not affect prompt payment requirements for non-holdback amounts.
Notices of Non-Payment: Getting the Process Right
While this new Act seeks to reduce money disputes between parties, it can’t eliminate them. Contracts are complex, and disagreements are bound to happen.
What will change when the Prompt Payment Act is implemented is how disputes are resolved and handled.
A notice of non-payment must be sent within the specified deadline (generally 14 days for an owner). The notice must detail the reasons for the dispute and identify the specific amount being disputed.
This requirement seeks to improve transparency between parties during disagreements.
Failure to provide a notice of non-payment within the imposed deadline could affect a payer’s ability to withhold funds.
Fast-Tracking Adjudication and the Dispute Process
Apart from setting strict timelines and deadlines for payment and notices, one of the key features of the legislation is its introduction of a new interim adjudication process.
A Faster Adjudication Timeline
In BC and many parts of Canada, the old system for construction disputes typically takes months, sometimes even over a year. Disagreements often go through litigation, arbitration, and lengthy negotiations.
The Prompt Payment Act, however, significantly shortens this. Interim adjudication is designed to resolve construction payment disputes in a matter of weeks rather than years. This is a major upgrade, saving plenty of resources and valuable time for the parties involved.
How Adjudication Works Now
The entire dispute resolution process is designed to move as quickly as possible.
The owner and the contractor can choose an adjudicator to resolve their case. If they can’t agree, the adjudication authority will assign one for them. Adjudicators will come from a registry of qualified professionals.
Those involved, particularly the claiming party, will be expected to submit relevant documents, evidence, and arguments. The other side is given a short period to respond.
Under the Act, the adjudicator must issue a written determination within a short prescribed period, generally about 30 days after receiving the parties’ materials, subject to limited extensions. (The precise timelines will be confirmed in the regulations.)
The adjudicator’s determination is binding on an interim basis. That means the owner and the contractor must adhere to the decision, even if one of them can still pursue a court review or litigation afterwards.
This is often referred to as the “pay now, argue later” principle. The major advantage of this system is that it keeps projects moving with minimal disruption.
Prompt Payment and the Builders’ Lien Act
It’s important to point out that the prompt payment law doesn’t replace the BC Builders Lien Act. Instead, the two frameworks work together to achieve faster payment and stronger protections.
The Builders Lien Act has always provided essential protection for contractors, suppliers, and workers at the lower tiers. It allows them to secure their right to payment for services and materials used on a project.
That said, one key aspect that the Prompt Payment Act affects is the length of the statutory holdback.
In the past, claimants had to wait 55 days after a project’s completion before the holdback funds were released. This will be reduced to 46 days after a contractor issues a certificate of completion.
Remember, payment disputes don’t pause your other legal requirements.
Contractors planning to file a builder’s lien must still do so within the prescribed schedule. In short, you should still take the appropriate steps to protect your lien rights.
What Does the Act Mean for Owners, Contractors, and Subcontractors?
The Prompt Payment Act will affect everyone in the construction pyramid, but owners are likely to experience the most change with the stricter payment deadlines.
If you’re a property owner, you’ll be required to review invoices faster. If you find a problem with the payment request, you’re required to provide the appropriate notices within the timeframes set by the Act.
This may mean updating your internal approval workflows to remain compliant and avoid facing legal issues. Careful documentation will become more important once the Act takes effect in British Columbia.
For contractors and subcontractors, the Prompt Payment Act may mean faster payment, but it also comes with a new set of responsibilities.
Invoices must be prepared properly, accurately, and on time. Additionally, your payment obligations to subcontractors and suppliers must be met in accordance with the legislation’s timelines.
What Can You Do to Prepare?
While the Prompt Payment Act is not yet enforced, companies in the construction industry may greatly benefit from preparing well in advance.
Audit Your Current Agreements
The first thing you want to do is go through and review the templates of your current contracts.
Many of these legal arrangements include payment schedules, invoice requirements, and dispute mechanisms. Elements that will be directly affected by the Act.
Take note of provisions that may not align with the new legislation. Making an updated version beforehand can save you a lot of time later.
Standardize Proper Invoices
Proper invoicing is a major feature and requirement of the new law. So, you want to ensure that your invoice formats include all the essential information prescribed in the new Prompt Payment Act.
Have you already standardized your invoice submission procedures for your projects? If not, this may cause problems later when the Act lands.
Proper Documentation Practices
Good recordkeeping isn’t only important for project tracking. It becomes critical when the Prompt Payment Act takes effect.
In addition to the contract and key specifications, you want to keep a copy of everything, from daily progress logs and change orders to inspection reports and communications with owners or contractors.
The fast procedures of interim adjudication mean you’ll need to provide evidence and arguments on short notice.
Getting Legal Advice Early to Save Time, Money, and Disputes
The new Construction Prompt Payment Act is shaping up to be one of BC’s most significant reforms in the construction industry in recent memory.
Understanding your rights, whether you’re an owner, contractor, or subcontractor, may well save you from time-consuming and costly legal disputes in the future.
If you have questions about how the new legislation may impact your contracts, obligations, and rights, feel free to contact Harbourview Law Group for expert legal advice in British Columbia.