How does holdback work under Ontario's Construction Act?
Every payer on an Ontario construction contract retains a 10% holdback as services and materials are supplied, until the liens against it expire or are discharged. From 1 January 2026 the owner also releases holdback each year after a published notice, unless a lien stands, and the contractor passes each subcontractor its share within 14 days.
Retained, then released
Every payer retains 10% as the work is supplied. A payer may pay up to 90% without jeopardy unless it has received written notice of a lien, when it must also retain enough to satisfy the lien (s 24). A duty on the owner, in force from 1 January 2026: Form 6, published on a construction trade news website (the Daily Commercial News, Link2Build or Ontario Construction News), stating the holdback it intends to pay and the payment date. For a contract entered into before 1 January 2026, the first anniversary that counts is the second one after that day, and that payment includes all holdback accrued before it (s 87.4(4)). The contractor passes each subcontractor its share within 14 days of receiving it, and what is left is paid within 14 days after the liens against it expire or are discharged.
| Duty | Window and section | If missed |
|---|---|---|
| Retain a holdback of 10% of the price of the services or materials as they are supplied, until every lien that may be claimed against it has expired or been discharged | none sets 22(1)-(4), 23, 24, 30 | you are liable for the full amountDisputes |
| Watch for the owner's notice of annual release of holdback, due within 14 days after each anniversary of the day the contract was entered into | 14 dayss 26(2), (3), 87.4(4); O. Reg. 303/18 s 2(6); O. Reg. 304/18 s 1, 7 | a breach of contractDisputes |
| Be paid the holdback accrued in the contract year between 60 and 74 days after the owner publishes the notice of annual release, unless a lien is preserved and still standing | 74 dayss 26(4), (7), (9), 87.4(4) | a breach of contractDisputes |
| Pay each subcontractor its accrued holdback within 14 days after receiving the matching holdback from the owner | 14 dayss 26(5)-(8) | a breach of contractDisputes |
| Be paid all remaining basic holdback within 14 days after every lien that may be claimed against it has expired or been discharged | 14 dayss 26(8) para 1, 27 | a breach of contractDisputes |
| Hold every amount owed or received on a contract or subcontract in trust for the subcontractors and suppliers owed, in a bank account in the trustee's name, with written records of every amount in and out | none sets 8(1), (2), 8.1, 10, 13 | a breach of contractLapsed compliance |
| On entering a public contract of CAD 500,000 or more, give the owner a labour and material payment bond and a performance bond, each covering at least 50% of the contract price | none sets 85.1(1)-(7), 85.2; O. Reg. 304/18 s 12, 12.1 | a breach of contractLapsed compliance |
What the library notes on each duty
Quoted a whole sentence at a time from the library's note on each row.
Retain a holdback of 10% of the price of the services or materials as they are supplied, until every lien that may be claimed against it has expired or been discharged
s 22(1)-(4), 23, 24, 30 · none set · you are liable for the full amount
- Binds every payer: the owner, the contractor and each subcontractor (s 22(1)).
- After substantial performance, a separate 10% holdback applies to the finishing work (s 22(2)).
- It may be held as a letter of credit or a demand-worded holdback repayment bond in the prescribed form (s 22(4)).
- A payer may pay up to 90% without jeopardy unless it has received written notice of a lien, when it must also retain enough to satisfy the lien (s 24).
- An owner is personally liable to lien claimants for the holdback it was required to retain (s 23).
- On abandonment or termination, holdback may not be applied to substitute work or a claim against the contractor until the liens expire (s 30).
Watch for the owner's notice of annual release of holdback, due within 14 days after each anniversary of the day the contract was entered into
s 26(2), (3), 87.4(4); O. Reg. 303/18 s 2(6); O. Reg. 304/18 s 1, 7 · 14 days · a breach of contract
- A duty on the owner, in force from 1 January 2026: Form 6, published on a construction trade news website (the Daily Commercial News, Link2Build or Ontario Construction News), stating the holdback it intends to pay and the payment date.
- For a contract entered into before 1 January 2026, the first anniversary that counts is the second one after that day, and that payment includes all holdback accrued before it (s 87.4(4)).
- The Act states no consequence for a missed notice.
Be paid the holdback accrued in the contract year between 60 and 74 days after the owner publishes the notice of annual release, unless a lien is preserved and still standing
s 26(4), (7), (9), 87.4(4) · 74 days · a breach of contract
- In force from 1 January 2026.
- The owner pays all holdback accrued on the contractor's supply in the year before the anniversary, at least 60 and not later than 74 days after the notice, unless a lien has been preserved or perfected on the contract and not discharged or vacated (s 26(4)).
- Holdback held back for that reason is payable within 14 days after the reason ends (s 26(7)).
- The window is the outer 74 days.
Pay each subcontractor its accrued holdback within 14 days after receiving the matching holdback from the owner
s 26(5)-(8) · 14 days · a breach of contract
- Applies to the annual release (s 26(5)), to holdback that becomes payable once a lien is discharged (s 26(7)), and to the final release after liens expire (s 26(8) para 2), unless a lien is preserved and standing on that subcontract.
- Each subcontractor owes the same to its own subcontractors (s 26(6), 26(8) para 3).
Be paid all remaining basic holdback within 14 days after every lien that may be claimed against it has expired or been discharged
s 26(8) para 1, 27 · 14 days · a breach of contract
- Covers holdback not paid in an annual release.
- The separate finishing work holdback is paid once the liens against it have expired or been discharged, with no day count (s 27).
- For supply up to substantial performance, liens expire 60 days after the certificate is published (s 31), so this payment falls due about 74 days after publication when no lien is preserved.
Hold every amount owed or received on a contract or subcontract in trust for the subcontractors and suppliers owed, in a bank account in the trustee's name, with written records of every amount in and out
s 8(1), (2), 8.1, 10, 13 · none set · a breach of contract
- The contractor or subcontractor is trustee and may not use the fund for itself until everyone it owes for the improvement is paid (s 8(2)), holdback included (s 8(1)).
- Several trusts may share one account if records are kept separately for each (s 8.1(1) para 3, 8.1(2)).
- Directors, officers and anyone in effective control who assent to a breach of trust are personally liable, jointly and severally (s 13).
- The Act states no offence.
On entering a public contract of CAD 500,000 or more, give the owner a labour and material payment bond and a performance bond, each covering at least 50% of the contract price
s 85.1(1)-(7), 85.2; O. Reg. 304/18 s 12, 12.1 · none set · a breach of contract
- A public contract is one whose owner is the Crown, a municipality or a broader public sector organization (s 85.1(1)); an architect or engineer contractor is exempt (s 85.1(3)).
- Bonds are in the prescribed form, from an insurer licensed to write surety and fidelity insurance, and the payment bond protects subcontractors and suppliers (s 85.1(4), (5)).
- Above CAD 500,000,000 the owner sets the limit, at least CAD 250,000,000 (O. Reg. 304/18 s 12.1(2)).
- A person the payment bond guarantees may sue on it (s 85.2) or refer a dispute to adjudication (O. Reg. 264/25 s 33).
When holdback is not released
A lien preserved on the contract and still standing holds back the annual release; how liens are preserved and perfected is on liens. A dispute over the payment of holdback can go to adjudication.
What this page is, and is not
It is the section text this library holds for Ontario's Construction Act, R.S.O. 1990, c. C.30 (Ontario), the Occupational Health and Safety Act, R.S.O. 1990, c. O.1 (Ontario) and Construction Projects, O. Reg. 213/91 (Ontario), with the window and the consequence. It is not legal advice, and it is not a substitute for reading the Acts, the regulations and the contract you signed.
Demiton does not yet track Ontario projects. These pages set out the duties; the product does not run these checks on an Ontario job today.
No library of law is complete, and Demiton never says this one is. An obligation the library does not hold, and you did not add, is not protected. You can add your own to any job.