What does the Construction Act say about holdback?
It is a duty, not an option: Each payer upon a contract or subcontract under which a lien may arise shall retain a holdback equal to 10 per cent of the price of the services or materials as they are actually supplied under the contract or subcontract until all liens that may be claimed against the holdback in respect of the supplied services or materials have expired or been satisfied, discharged or otherwise provided for under this Act.
(Construction Act, s. 22(1)) The other side of it: A payer may, without jeopardy, make payments on a contract or subcontract up to 90 per cent of the price of the services or materials that have been supplied under that contract or subcontract unless, prior to making payment, the payer has received written notice of a lien.
(Construction Act, s. 24(1))
How long do the liens last?
Sixty days after the job ends, in most cases. A contractor's lien, where no substantial performance was certified, expires at the conclusion of the 60-day period next following the occurrence of the earlier of, (i) the date the contract is completed, and (ii) the date the contract is abandoned or terminated.
(Construction Act, s. 31(2)(b)) Once the liens have expired or been dealt with, the owner pays the holdback: The owner shall make payment of the holdback to the contractor not later than 14 days after the liens have expired or been satisfied, discharged or otherwise provided for under this Act.
(Construction Act, s. 26(8))
What about a job that runs past a year?
Since January 1, 2026, the owner releases holdback every year. Following each anniversary of the date on which the contract was entered into, the owner shall, (a) give notice in accordance with subsection (3); and (b) make payment of accrued holdback
. The notice comes Not later than 14 days after the anniversary
, and the payment At least 60 days but not later than 74 days after the date on which the notice of annual release of holdback is published
, unless a lien has been preserved or perfected. (Construction Act, s. 26(2) to (4)) A building done unit by unit over more than a year is where this shows up.
How fast must I pay an invoice?
Within 28 days of a proper invoice. Subject to the giving of a notice of non-payment under subsection (2), an owner shall pay the amount payable under a proper invoice no later than 28 days after receiving the proper invoice from the contractor.
To dispute it, the owner acts within 14 days: an owner may refuse to pay all or any portion of the amount payable under the proper invoice
if, no later than 14 days after receiving the proper invoice from the contractor, the owner gives to the contractor a notice of non-payment, in the prescribed form and manner
. (Construction Act, s. 6.4(1) and (2)) The 28 days are subject to the holdback, which the Act says in so many words. (Construction Act, s. 6.2)
What makes an invoice a proper invoice?
A written bill with set contents: among them The contractor’s name and address
, A description, including quantity where appropriate, of the services or materials that were supplied
and The amount payable for the services or materials that were supplied, and the payment terms.
(Construction Act, s. 6.1(1)) If something is missing, the owner has seven days to say so: otherwise the invoice is deemed to be a proper invoice
. (Construction Act, s. 6.1(2)) A Reborn Renos quote already lists every part of the job, unit by unit, each line with its own price, then HST.
What are the deadlines, side by side?
| What | Deadline | Section |
|---|---|---|
| Say an invoice is missing something | 7 days after receiving it, or it counts as a proper invoice | s. 6.1(2) |
| Dispute a proper invoice | Notice of non-payment within 14 days after receiving it | s. 6.4(2) |
| Pay a proper invoice | No later than 28 days after receiving it, less the holdback | s. 6.4(1), s. 6.2 |
| Holdback kept back | 10 per cent of what has been supplied | s. 22(1) |
| Annual holdback notice | Within 14 days after each anniversary of the contract | s. 26(3) |
| Annual holdback payment | 60 to 74 days after that notice is published | s. 26(4) |
| Final holdback payment | Within 14 days after the liens expire or are dealt with | s. 26(8) |
What should I settle before the work starts?
Three things, in writing: how the holdback appears on each invoice, the date the contract is entered into (the anniversary counts from it), and who gets the invoices. Two more checks belong in the same folder: the contractor's WSIB clearance certificate, and, in an older building, the asbestos check before renovating. For the work itself, see apartment and commercial renovations or, for a building on a regular schedule, property service agreements. Managers paying on an owner's behalf can start at work for property managers.
We work in Beamsville, Lincoln, Grimsby, Stoney Creek, Hamilton, St. Catharines, Thorold and Niagara Falls. Call (905) 920-1418, Monday to Saturday, 7 am to 7 pm, or send the details on the request page.
This is a plain summary, not legal advice. The Act has more rules than this page, so ask a lawyer how it applies to your contract.