Ontario has implemented significant amendments to the Construction Act and its regulations effective January 1, 2026, aimed at accelerating cash flow, clarifying rights, and refining adjudication and trust mechanisms across the construction pyramid. This article condenses the principal changes and their practical consequences for construction practitioners in Ontario.
Legislative Background and Coming-Into-Force
Following the 2018 modernization of the Construction Act, representatives of the Council of Ontario Construction Associations met with the Attorney General Doug Downey in 2022 to discuss industry experience under the amended legislation. At the Attorney General’s request, a report prepared by COCA counsel Glenn Ackerley was submitted in July 2023.
The Attorney General subsequently commissioned a further review in 2024, led by Duncan Glaholt, which culminated in a report released on October 30, 2024, containing 44 recommendations, including the introduction of mandatory annual holdback release.
The government introduced amendments through Bill 216, the Building Ontario For You Act (Budget Measures), 2024, which received Royal Assent on November 6, 2024. Additional refinements followed in Bill 60, the Fighting Delays, Building Faster Act, which received Royal Assent on November 27, 2025. The Construction Act and related regulatory amendments came into force on January 1, 2026.
Liens and Holdback
Mandatory annual release of holdback
The central change is a new regime mandating annual release of accrued holdback on each anniversary of the owner–contractor contract, replacing the prior optional annual or phased release framework. Owners must publish a notice of annual release of holdback in the prescribed form within 14 days after the contract anniversary, identifying the amount to be paid and the intended payment date. Payment to the contractor must follow between 60 and 74 days after the publication of the notice, subject to any preserved or perfected lien that remains undischarged, unvacated, or unexpired. If payment is blocked by a preserved/perfected lien, the payer must release holdback no later than 14 days after the impediment ceases, and not earlier than 60 days after the notice publication.
Once paid by the owner, accrued holdback must flow down to subcontractors within 14 days, and further to lower tiers within 14 days, except where a lien in the immediate tier has been preserved or perfected. The statute does not expressly prescribe how “accrued holdback” is calculated, but the legislative intent—reflected in the review that prompted these amendments—supports calculation by reference to proper invoices issued in the relevant year, subject to adjudication outcomes. Other triggers for holdback release remain in place (for example, following substantial performance, contract completion, or certification of completion of a subcontract), and s. 26(8) mandates payment of any holdback not released annually when liens expire.
Elimination of notice of non-payment for holdback; restrictions on set-off
The prior notice-of-non-payment mechanism for holdback has been repealed, eliminating an owner’s or contractor’s ability to withhold holdback through a statutory notice. As a result, annual holdback amounts must be paid without deduction, set-off, or withholding once due under the annual release regime. In tandem, amendments to s. 30 prohibit set-off against holdback when a contract or subcontract is abandoned or terminated until lien rights have expired, though the interaction of s. 30 with the now-mandatory annual release in s. 26 is unclear and may require legislative clarification.
No annual expiry of lien rights
A key policy reversal from Bill 216 is that lien rights do not expire on an annual basis. Following stakeholder feedback, Bill 60 restored the pre‑2026 framework: lien preservation and expiry remain tied to events such as substantial performance, completion, abandonment, or termination for the contractor’s lien, and for other parties to the last supply date or certification under s. 33, among other triggers. The owner’s obligation to release holdback is now tied to publication of the annual release notice, not to annual lien expiry, improving cash flow but potentially reducing the owner‑held security available to satisfy subcontractor liens if the contractor defaults.
Lien rights for preconstruction design services
New s. 14(4) creates a presumption that architects and engineers who prepare designs, plans, drawings, or specifications for a planned improvement have a lien for the price of those services where the owner retains holdback, unless the owner proves the services did not enhance the value of the land. This addresses longstanding uncertainties about lien rights for preconstruction professional services before physical improvement occurs.
Prompt Payment and Adjudication
Deeming provision for “proper invoices”
To curb tactical objections to minor invoice defects, an invoice is now deemed a “proper invoice” unless the owner provides written notice within seven days identifying the deficiency and how to remedy it. This deficiency notice does not extend the 14‑day deadline to issue a notice of non‑payment; both periods run concurrently, shifting administrative responsibility to owners and providing contractors a presumption of compliance absent timely, specific owner notice.
Extended adjudication window
Adjudication can now be commenced within 90 days after contract completion, abandonment, or termination for contracts, and within 90 days of the earliest of specified events for subcontracts (including completion/abandonment/termination of the prime contract, certification of the subcontract under s. 33, or last supply). The extension preserves access to adjudication for holdback-related disputes and post‑completion payment issues that otherwise would have been excluded at completion under the prior wording.
Expanded adjudication scope
Ontario Regulation 264/25 now governs adjudication scope, allowing parties to refer disputes prescribed by regulation or agreed in the contract, reflecting an evolution from a targeted to a more open model of adjudication subject to the adjudicator’s concurrence.
Private adjudicators and fee floor
In addition to registry adjudicators, parties may now retain “private adjudicators” qualified by ODACC, provided the parties and adjudicator execute a written agreement disclosing the terms and an adjudicator fee that equals or exceeds an hourly rate of $1,000. An individual cannot simultaneously hold certificates as a registry and a private adjudicator, though certificates may be exchanged through ODACC. The $1,000/hour minimum appears designed to differentiate the private market from the registry model and mitigate migration from the registry.
Publication of adjudication determinations
To enhance transparency, ODACC will publish adjudication determinations beginning with adjudications where the notice of adjudication is given on or after January 1, 2027, with an anonymization process available at the request of any party. The objective is transparency and accountability rather than the creation of binding precedent.
Costs for bad faith in adjudication
Section 13.17 has been clarified so that an adjudicator may award costs where a party acts in a frivolous, vexatious, abusive, or bad‑faith manner “in respect of the adjudication,” addressing prior ambiguity and responding to concerns about adjudication processes being inflated or delayed.
Trust Provisions
Sections 7 and 8 are amended to confirm that holdback required to be retained is itself subject to the statutory trust obligations applicable to owners, contractors, and subcontractors, reinforcing enforcement mechanisms after lien rights expire.
Administrative and Procedural Changes
Publication requirements have been modernized: “construction trade newspaper” has been replaced with “construction trade news website,” and three platforms are designated—The Daily Commercial News, Link2Build, and Ontario Construction News—reducing disputes over proper publication. Parties may now join lien and breach of trust claims in a single action, with motions for relief from joinder governed by Rule 5.05 of the Rules of Civil Procedure through O. Reg. 302/18.
Transition
Mandatory annual holdback release applies to new contracts entered after January 1, 2026 beginning with the first anniversary of the contract. For contracts effective prior to January 1, 2026, annual release begins on the second anniversary that follows January 1, 2026. P3 project agreements entered before January 1, 2026 continue under the pre‑2026 s. 26 regime and are not subject to the annual holdback release framework. Existing transition rules under s. 87.3 remain unchanged: for improvements where the contract was entered into or procurement commenced on or before June 30, 2018, the prior Construction Lien Act continues to apply, including the pre‑2018 lien timelines and absence of adjudication and prompt payment.
Practical Implications
For owners and general contractors, the annual holdback release regime requires disciplined calendaring and cash‑flow planning, front‑end publication of annual notices, and on‑time release within the 60–74‑day window, while eliminating notice‑based withholding strategies. Owners should expect more frequent adjudications tied to proper invoices and annual holdback flows where invoice amounts are contested, given the strengthened deeming rule and potential calculation of accrued holdback by invoice issuance within the year. Subcontractors benefit from more regular cash flow but lose some comfort from owner‑retained security once annual release occurs; vigilance over downstream payments and timely recourse to adjudication are essential. Design professionals should revisit contract structures for preconstruction services in light of the new presumption attaching lien rights where holdback is retained, and consider explicitly providing for holdback. Finally, practitioners should update standard forms, workflows, and publication protocols to align with the new regulatory framework, including broadened adjudication scope, the option of private adjudication, and publication of adjudication determinations from 2027.
Any article or other information or content expressed or made available in this Section is that of the respective author(s) and not of the OBA.