Although the transition from the Construction Lien Act to the Construction Act may still feel recent, further changes are on the horizon.
Last November, Bill 216 received Royal Assent, enacting the Building Ontario For You Act. This legislation introduces amendments to the Construction Act, including significant changes to holdback rules.
The New Holdback Release Scheme
One of the most impactful changes is the introduction of a mandatory annual holdback release schedule. If you’ve been waiting years for your holdback funds, this change should help—especially if you’re an early trade on a project.
Under the new regime, the Owner must publish a Notice of Annual Holdback Release within 14 days of the contract’s anniversary date.
For example:
• If the contract was signed on June 5, 2025, the Owner must publish the Notice by June 19, 2026.
• If no liens are preserved or perfected within 60 days of the Notice, the Owner must release the holdback within 14 days.
In this scenario, if the Notice was published on June 19, 2026, and no liens were filed by August 18, 2026, the holdback funds must be released by September 1, 2026.
What does this all mean?
Simply put, trades will receive holdback payments for completed work sooner.
Large construction projects take years to complete and waiting that long to collect 10% of your billable work can significantly impact cash flow. If a contractor operates on a 5% profit margin, they effectively carry a loss on the project until holdback is paid.
Lien Rights
For work completed in the year before the Notice, lien rights will now expire 60 days after the Notice is published.
Because holdback funds will be released annually, fewer funds will remain at the end of the project for lien claimants. This makes timely lien preservation even more critical.
No More Holdback Set-Off
Another major change is the repeal of section 27.1 of the Construction Act, which previously allowed Owners to withhold holdback funds by publishing a notice stating their reasons.
With this repeal, and in combination with the revised section 26, Owners will have significantly fewer options for withholding holdback payments. They should consult legal counsel before attempting to assert set-off against these funds.
This change reinforces the original purpose of statutory holdback: to ensure that all trades and suppliers are paid for completed work. While Owners can still dispute payments for deficiencies, they should seek legal advice before deducting disputed amounts from holdback funds.
If you have questions about how these Construction Act changes impact your business, or if you need legal guidance on construction matters, RSR Lawyers would be pleased to assist.
