While many segments of the construction industry in British Columbia continue to advocate for prompt payment, the residential sector is taking a different view.
Canadian Home Builders’ Association of BC (CHBA BC) CEO Neil Moody said while his organization sees the need for prompt payment in larger industrial and commercial projects, conditions are often different for homebuilders in British Columbia.
“We have to understand that each sector of construction has different needs in terms of timelines and processes,” Moody said.
“It may work for the ICI sector and that’s great. We absolutely want contractors to get paid, but we’ve heard from our members that it would add costs and they’re already under an enormous regulatory burden,” he said.
Moody also pointed out while other jurisdictions such as Alberta and Ontario have already adopted prompt payment in various forms, the conditions in those provinces differ from B.C.
“Ontario has homebuilders that are big in scope and size. In B.C., some firms only build three to five homes a year,” he said.
A one-size-fits-all system won’t work
In early 2020 CHBA BC and Homebuilders Association Vancouver collaborated on a consultation paper which recommended keeping discussion of prompt payment measures and the Builder’s Lien Act separate.
The lien act, the paper said, provides sufficient ability to asset an interest in a homeowner’s property for non-payment and should not be repealed.
“Although a builder acting as a general contractor does have a direct contractual claim against a homeowner, the ability to file a claim of lien still provides a valuable means of securing that claim against an asset that has been improved through the builder’s efforts,” the paper said.
“Although builders and subcontractors working in the residential sector are often smaller businesses than those operating in the commercial sector, they should be able to protect their rights to payment and the Builders Lien Act is the most appropriate avenue for this to take place when necessary.”
“The government should just improve the lien system we have already,” Moody said. “We can’t impose one-size-fits-all. It will just create a more complicated system.”
‘We don’t want building to come to a standstill’
He added given the enormous demand for new and affordable housing, prompt payment regulations could actually delay the process.
“Prompt payment would certainly slow down homebuilding, because the project has to come to a stop. We don’t want building to come to a standstill based on that. Often smaller builders don’t have the wherewithal to follow up,” Moody said. “Smaller firms often only have one bookkeeper.”
Prompt payment would also create additional regulatory hurdles to building when small firms are already bogged down with a bureaucratic permitting structure and significant delays.
“There are so many administrative burdens already and then you have to consider the compliance factor as well. The government will need to hire more people and ultimately it’s the homebuyer that pays for that,” Moody said.
“It’s adding a little more to the matrix of what you have to look at for the entire matrix of homebuilding and prompt payment would just add to that cost.”
While the City of Vancouver is one of the most regulated areas to build a home in the province, Moody said he’s heard concerns from membership across B.C.
“Our position comes from the concerns of our members. We’re hearing from the Fraser Valley, the Interior, throughout the province. Northern B.C. members consider this a big issue and they don’t want prompt payment to come in,” he said.
Floating Retainers worked well for us for 20 years. Worked stopped on projects until retainer was replenished. If it was not, move onto the next client.