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  • Statement from the SCA: Developers Not Paying Contractors On Time

    July 10, 2020

    STATEMENT FROM THE SCA:

    Regina man worried he'll lose late wife's dream home because developer didn't pay subcontractors – CBC Saskatchewan

    The SCA formally acknowledges the devastating story released by CBC Saskatchewan on July 9, 2020, with regards to Jason Merkl paying the full cost of his home, but that his developer failed to pass on those payments to the tradespeople who did the work. We are truly saddened by this event, and wish to respond to the general public about how this happened, and what we’re doing to stop it from happening again.

    The situation:

    As a result of the developer (Harmony Builders) allegedly not paying their contractors and subs on time, 11 companies have placed liens on the project, totalling about $175,000, and legal suits have been filed against the developer and Mr. Merkl. You can read the full article from CBC Saskatchewan here.

    How could this happen?

    Unfortunately, late payment is a systemic issue in construction, and it has a devastating domino effect down the chain of contractors, sub-contractors, and suppliers. Too often, we hear horror stories of companies not getting paid 90+ days after work was completed on time and to specifications.

    Why? The flow of money starts at the top. The owner of the project first must pay the general contractor (the lead builder coordinating the project), the general contractor can then pay the trade and sub contractors (such as roofers, electricians etc.) below them, and then those contractors pay their suppliers (shingle sales, paint, floor boards etc.) below them. If there’s ANY disruption in this chain, everyone is held up. Meanwhile, they are still expected to show up on site, purchase products, pay their labour, pay their own bills – the list goes on.

    Late payment has a very real effect on Saskatchewan business owners’ ability to bid on the next job without cash in the bank, and ultimately – to pay their own bills on time. Sadly, some companies are forced to carry huge uncertain debt or go out of business entirely, and that impacts Saskatchewan families. Jason Merkl’s story is a devastating example, but it’s not the only one.

    What’s being done to stop this?

    Four years ago, the SCA began the long and complicated process of working with the Government to pass a new law in Saskatchewan called ‘Prompt Payment Legislation’, to stop tragedies like this from happening.

    Simply put – this legislation would bind everyone in the building process, by law, to pay up within 28 days. If they don’t comply, there’s a process in place to fairly assess why, give notice to others in the chain, and prove that work was not completed satisfactorily within 14 days – or the money will be moved for you, plus interest for holding everyone up unnecessarily. Sounds fair, right?

    So, what’s the status of this legislation? It was passed unanimously in the house in 2019, which means that the Government of Saskatchewan is receptive to being the second province in Canada to enforce prompt payment.

    Here’s the catch – the Minister of Justice, Hon. Don Morgan, felt that residential developers (such as Harmony Builders and other home builders) should be exempt from that law. The SCA fervently disagrees with that, and we have been lobbying hard against ANY exemption. Perhaps Mr. Merkl’s story will change his mind.

    And that, folks, is where we sit today. We are happy to answer any and all questions around the details of Prompt Payment Legislation. Contact Mark Cooper, President & CEO, at president@scaonline.ca for questions, and please direct any media inquiries to media@scaonline.ca.

    Enough is enough, let’s end this cycle.


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