Release of Holdbacks to be Delayed
Recently, the government announced that they were removing the requirements for time limits on limitation periods and other such things. This has had an unintended consequence, we believe, which we are going to bring to the government's attention. The Holdback is a limitation. During that period, owners are looking to ensure that no liens have been filed against the property or project.
The result of the legislation, without taking into account how our industry operates, means that owners are no longer in a position to release their Holdback. We have been advised by several lawyers that they are having no choice but to advise their clients not to release Holdbacks, the reason being that without a limitation, there is an unending ability for liens to be filed. Until such time as an owner can be assured that the liens can't be filed, they are not in a position to release the Holdback.
We will urge the government to address this issue as quickly as possible so that monies that are owed legitimately should be released and can be released without penalty.
Below is an example of some language that has been sent to a contractor. All contractors in all sectors should be prepared to receive similar letters in the very near future until this can be addressed.
“Unfortunately, I have to let you know that currently, the Region will be unable to release your holdback 45 days after your date of Publication. Due to an Order recently issued by the Province suspending limitation periods, our legal department has advised that for any of our contracts where the deadline to preserve a lien expires on or after March 16, 2020, holdback cannot be released for that contract. This will remain in effect until such time as the suspension is lifted by the Province.”