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If architects have not been the payment certifier from the start of the project, they cannot certify substantial performance, but the owner and contractor may do so upon mutual agreement.
According to the Construction Lien Act of Ontario (CLA) and the Construction Act (CA), substantial performance is achieved when the construction contract has been completed to a specific percentage of the total dollar value and the premises can be used for the purposes intended. In order to certify substantial performance, the payment certifier needs to know the current contract value and have an itemized breakdown of the contract value such as in the Schedule of Values.
The CLA and CA define a payment certifier as “an architect, engineer, or any other person upon whose certificate payments are made under a contract or subcontract”. When the architect has not been certifying payments since the first application for payment on a project, or the architect does not have full knowledge of any contract changes, then the architect cannot be regarded as the payment certifier.
Further, if an architect has not been payment certifier since the beginning, they cannot take that role on part way through the process since some of the work will already have been concealed and can no longer be evaluated for conformance to the contract documents, building code, or other applicable legislation.
It follows then that unless an architect has been the payment certifier since the beginning, the architect cannot make a determination as to the financial requirements for Substantial Performance having been met. This should be reviewed with the client before the client/architect agreement is finalized.
|Some clients have decided not to retain the architect to do payment certification only to discover that their lending institution requires third party payment certification before releasing construction funds.
Some lending institutions request that the client’s architect make a declaration using the lending institution’s forms. Architects should refer to PT.17 Lending Institutions – Architect’s Certificates for a discussion of the problems and liability in doing so.
The CLA and CA state in part in 32 (1) 1...... ”If there is no payment certifier, the Owner and Contractor shall make the determination jointly and both sign the certificate." and 32 (1) 2. "The payment certifier or the owner and the contractor jointly, as the case may be, shall set out in the certificate the date on which the contract was substantially performed." It is clear that the Owner and Contractor can make the determination and jointly sign the certificate of Substantial Performance.
Where multiple contracts are being performed at the same time, architects should be careful to only certify the appropriate work being done under the contract(s) that are part of their scope of work. For example, if a construction manager is involved and their invoices are being approved by the owner or an owner’s representative, the architect should explicitly exclude that from any calculations. It follows then, that the contracts will have to be arranged so that there is one certifier for each contract to avoid the architect being asked to include in a certificate the value of work done of which the architect has no direct knowledge.
The requirements for certification of substantial performance in Ontario are in the Construction Lien Act and the Construction Act.
From The Construction Lien Act, RSO 1990…
Since the certifier will be required to confirm that substantial performance has been achieved, in Subsection 2(1), the CLA defines the term as follows:
“(1) For the purposes of this Act, a contract is substantially performed,
(a) when the improvement to be made under that contract or substantial part thereof is ready for use or is being used for the purposes intended; and
(b) when the improvement to be made under that contract is capable of completion or, where there is a known defect, correction, at a cost of not more than,
(i) 3 per cent of the first $500,000 of the contract price,
(ii) 2 per cent of the next $500,000 of the contract price, and
(iii) 1 percent of the balance of the contract price.”
Subsection 2(2) of the Act further states:
“(2) For the purposes of this Act, where the improvement or a substantial part thereof is ready for use or is being used for the purposes intended and the remainder of the improvement cannot be completed expeditiously for reasons beyond the control of the Contractor or, where the Owner and Contractor agree not to complete the improvement expeditiously, the price of the services or materials remaining to be supplied and required to complete the improvement shall be deducted from the contract price in determining substantial performance.”
Subsection 2(3) of the Act determines when a contract is complete:
“(3) For the purposes of this Act, a contract shall be deemed to be completed and services or materials shall be deemed to be last supplied to the improvement when the price of completion, correction of a known defect or last supply is not more than the lesser of,
(a) 1 percent of the contract price; and
From The Construction Act, RSO 1990…
The requirements in the Construction Act are the same as in the CLA except that the threshold dollar amounts have been increased as follows:
“(1) (b) (i) 3 per cent of the first $1,000,000 of the contract price,
(ii) 2 per cent of the next $1,000,000 of the contract price, and
(iii) 1 percent of the balance of the contract price.”
“(3) (a) 1 percent of the contract price; and