Surety Bonds and the Construction Act of Ontario

For the surety industry and its Ontario stakeholders, the world became a different place on July 1, 2018. On that date, the first phase of the new Construction Act of Ontario (“the Act”) took effect; providing the Ontario construction industry with a long overdue overhaul to the moribund and outdated Construction Lien Act.

The new legislation, which received Royal Assent on December 12, 2017 is truly the state-of-the-art in terms of creating a responsive and modernized approach to certainty and timeliness of payment for construction work in the province. The Act brought into force a number of ground-breaking measures that expedite the flow of money down the construction payment chain. It came about following an extensive consultation with industry participants and accomplishes the near-impossible objective of addressing the often conflicting needs of all major stakeholders.

The Surety Association of Canada is pleased to provide an overview of some of the major changes that took place in Ontario. We’ll discuss the Act itself along with the surety-related regulations and the prescribed bond forms which were developed by the Ministry of the Attorney General (MAG) in conjunction with our association. We’ll also offer our thoughts as to how the changes to the Ontario surety environment will affect key stakeholder groups; subcontractors, suppliers, general contractors, public owners and sureties themselves.

We remind readers that the observations and suggestions offered here are not intended to be an exhaustive list, or even an authoritative treatment of the Act or its potential impact on the various stakeholder groups. Indeed, the post-Bill 142 world will be new to everyone and will undoubtedly generate outcomes, circumstances and business scenarios that are unforeseeable to all. We strongly recommend that construction firms and supporting organizations consult with counsel and experts in their respective fields to prepare for the coming changes.