October 15, 2026

Construction Liens and Holdback in Ontario: The Owner's Side

A construction lien in Ontario is a claim against your property by someone who supplied work or materials to it and says they haven’t been paid. As the owner, your protection is the holdback: you keep back 10% of the value of the work as it’s done, and if you keep it properly your personal liability to lien claimants is generally capped at that amount. Since January 1, 2026, you also have to release that holdback every year on a fixed timetable, not only at the end of the job. Keep the holdback properly and meet the deadlines, and a lien is usually dealt with through a set, orderly process.

Most of what’s written about liens is for the trade filing one. This guide is for the owner: what the Construction Act asks of you, what changed in 2026, how to pay and release holdback on time, and what to do the day a lien is registered against your title. It isn’t legal advice; when a lien is registered, a construction lawyer acts on it.

How holdback and liens fit together

Money flows down a pyramid: you pay the general contractor, the contractor pays its subcontractors, and they pay their trades and suppliers. Someone near the bottom who isn’t paid has no contract with you, so the Act gives them a lien against the property they improved, and gives you a way to limit what that lien can cost you.

The 10% you keep

Every payer on a contract where a lien can arise has to retain a holdback of 10% of the price of the services or materials as they’re actually supplied (s. 22(1)). That applies whether the contract pays monthly or on completion (s. 22(3)). On a $400,000 progress invoice you pay $360,000 and keep $40,000. The contractor does the same with each of its subcontractors, and so on down.

Once a contract is certified substantially performed, any work still to be done carries its own separate 10% holdback from that date (s. 22(2)). That’s the finishing holdback, and it’s tracked apart from the basic one.

The 10% doesn’t have to be cash. Some or all of it can be held as a letter of credit or a demand-worded holdback repayment bond in the prescribed form (s. 22(4)).

Your limit of liability

Here is the reason holdback matters to an owner. Where the contractor is the one who failed to pay, your personal liability to lien claimants doesn’t exceed the holdbacks you were required to retain (s. 23(2)). Where a subcontractor further down failed to pay, it’s the lesser of your holdback and the holdback that should have been kept from that subcontractor (s. 23(3)).

The words that matter are “required to retain”. The cap is the holdback you should have kept, not the holdback you actually kept. An owner who paid out 100% of every invoice is still measured against the 10% they ought to have held, and has nothing in hand to meet it with.

The Act puts the same idea the other way round in section 24(1): you can pay up to 90% of the value of the work supplied “without jeopardy”, unless before you pay you’ve received written notice of a lien. Once you have that notice, you keep back enough to cover the lien as well as the holdback before paying anything more (s. 24(2)).

Who can claim a lien

Anyone who supplied services or materials to the improvement: the contractor, subcontractors, suppliers and designers. A lien claim is limited to what the claimant is owed for that improvement (s. 17(1)), and someone who registers a lien they know or ought to know is wilfully exaggerated, or that they don’t have, is liable for the damage it causes (s. 35).

If you’re a tenant doing a fit-out, the landlord is exposed too. Where the payment for the improvement is accounted for under the lease or an agreement connected to it, the landlord’s interest is subject to the lien to the extent of 10% of that payment (s. 19(1)). That’s one reason landlords ask for lien paperwork before releasing a tenant improvement allowance.

What changed on January 1, 2026

Amendments made by two statutes came into force on January 1, 2026: the Building Ontario For You Act (Budget Measures), 2024 and the Fighting Delays, Building Faster Act, 2025. The current e-Laws consolidation runs from that date. Blakes (January 2026) and WeirFoulds (February 2026) both have readable summaries. For an owner, these are the changes that alter what you do each month:

The publishing websites are named in the general regulation: The Daily Commercial News, Link2Build and Ontario Construction News. The notice of annual release is Form 6, the notice of termination is Form 8 and the certificate of substantial performance is Form 9, all under the forms regulation, O. Reg. 303/18.

One proposal didn’t survive. The 2024 amendments tied the annual release to lien expiry; the 2025 Act kept the annual release but, in Blakes’ words, “decouples holdback release from lien expiry” (the e-Laws history marks the 2024 change to section 31 “no effect”). So lien periods still run from substantial performance, completion, abandonment or termination, as they always have.

Paying invoices on time: prompt payment

Holdback and prompt payment are two halves of one system. Prompt payment, in force since October 2019, sets how fast money moves down the pyramid; holdback sets how much is kept back while lien rights are open. Both exist so that the people who did the work get paid. Paying on time and releasing on time gives the people down the chain less reason to register a lien in the first place.

The invoice clock

Proper invoices come monthly unless the contract says otherwise (s. 6.3(1)). From the day you receive one:

Giving a proper invoice can’t be made conditional on prior certification or your prior approval, though certification after the invoice is allowed (s. 6.3(2)–(3)).

What a proper invoice has to say

Section 6.1(1) lists it: the contractor’s name and address; the date and the period or milestone it covers; the contract, purchase order or other authorization it falls under; a description of what was supplied, with quantities where it makes sense; the amount and payment terms; and who payment goes to. Since 2026 you can also require anything else your accounts payable system needs, if you reasonably request it.

Put your requirements, including the backup you want, in writing before the first invoice, so the 7-day review is a check against a known list.

Making the deadlines work

An approval chain that takes three weeks misses both the 7-day and 14-day windows, and then the whole invoice is payable. Decide before construction starts who receives invoices, who checks them against the work on site, who signs a notice of non-payment and who pays. If your lender advances against each draw, its timetable has to fit inside the 28 days as well; our guide to construction financing in Ontario walks through how a draw is assembled and certified.

Disputes can go to adjudication, a fast interim decision under Part II.1 of the Act, and the adjudicator works from your notices and records. Most payment disputes are really about changes; our article on change orders covers how to keep those priced and agreed before the invoice arrives.

Releasing holdback: annual release and substantial performance

The annual release

After each anniversary of the date the contract was entered into, section 26 requires you to do two things:

1. Publish a notice of annual release of holdback (Form 6) no later than 14 days after the anniversary, stating the amount you intend to pay and the intended payment date (s. 26(3)). It goes on one of the three construction trade news websites.
2. Pay the contractor all the holdback accrued on work supplied in the year before the anniversary, at least 60 days and no more than 74 days after the notice was published (s. 26(4)).

The exception: you don’t pay if a lien has been preserved or perfected in respect of the contract and hasn’t been discharged or vacated (s. 26(4)(a)). Once that lien is dealt with, you pay within 14 days (s. 26(7)). The contractor then has 14 days after receiving the holdback to pay each subcontractor its accrued share (s. 26(5)), and the same rule runs down the chain (s. 26(6)).

A payment made in accordance with section 26 reduces the holdback you’re required to retain by the amount paid (s. 26(9)). That’s what makes the annual release safe for an owner who follows it: you aren’t left exposed for holdback you were required to pay out.

Contracts signed before 2026

If your contract was entered into before January 1, 2026, the first anniversary the new rule applies to is the second anniversary of the contract that falls after January 1, 2026, and that first payment includes all holdback accrued before it (s. 87.4(4)). A contract signed on March 1, 2025, for example, has anniversaries on March 1, 2026 and March 1, 2027; the first mandatory release follows March 1, 2027, and covers every dollar of holdback from the start of the job.

On a long project that’s a large single payment; it needs a line in the cash flow and, if you’re financed, in the draw schedule.

Substantial performance

At the end of the job, the contract is certified substantially performed when two things are true (s. 2(1)): the improvement or a substantial part of it is ready for use or being used for its intended purpose, and it can be completed (or a known defect corrected) for no more than 3% of the first $1 million of the contract price, 2% of the next $1 million and 1% of the balance.

On a $5 million contract that’s $30,000 + $20,000 + $30,000, so the work left to finish must be worth $80,000 or less. On $20 million it’s $230,000. Work it out for your own contract before the contractor applies.

Section 32 sets out who does what:

• The contractor applies, and the payment certifier (usually the architect or consultant named in the contract) decides whether the test is met and signs the certificate (Form 9). If there’s no payment certifier, you and the contractor decide jointly and both sign.
• The payment certifier gives you and the contractor a copy within 7 days of signing.
• The contractor publishes it on a construction trade news website. If the contractor hasn’t published within 7 days of receiving the signed copy, anyone can publish it, including you.
• If certification is unreasonably refused or delayed, anyone can apply to court for a declaration.

The certificate has no effect until it’s published (s. 32(1) para 10). That date starts the lien clock. What happens around that date, from the deficiency list to Ready-for-Takeover and closeout, is in our guide to substantial performance in Ontario.

Releasing the final holdback

Once all liens that could be claimed against the holdback have expired or been satisfied, discharged or otherwise provided for, you pay the remaining holdback to the contractor within 14 days, and the contractor pays its subcontractors within 14 days after that (s. 26(8)). The finishing holdback on work after substantial performance is released once liens against it have expired (s. 27).

Subcontractors don’t always have to wait for the end. A payment certifier can certify a subcontract complete under section 33 (or you and the contractor can jointly), which starts that subcontractor’s lien period running early and lets its holdback be released once its liens have expired (s. 25). On a job where the excavation or structural trade finished a year before handover, that’s worth doing.

How long liens last

A lien that has been preserved (registered on title) then has to be perfected within 90 days after the last day it could have been preserved, by starting a court action and registering a certificate of action, or it expires (s. 36(2)–(3)). So a lien registered on day 60 can sit on title for about three more months before the claimant has to sue on it.

When a lien is registered on your property

A lien on title is unwelcome, and it’s also routine. Most are about money in dispute between a contractor and a trade, not anything you did, and the process for dealing with them is orderly.

1. Find out from your title search or the claimant’s notice. Registration is on title at the land registry office (s. 34(1)). Your lawyer or your lender’s lawyer will usually see it on a subsearch before a draw; you may also receive a written notice of lien (Form 1).
2. Stop and recalculate before your next payment. From the moment you have written notice, keep back enough to cover the lien in addition to the holdback before paying the contractor any further amount (s. 24(2)). Don’t release annual holdback on that contract while the lien stands (s. 26(4)).
3. Read the claim. It has to show who is claiming, who they supplied to, when, what, the contract price and the amount claimed (s. 34(5)). Check it against what you know: is the claimant on your job, and does the amount look like their contract?
4. Talk to your contractor the same day. Often the lien is from one of its subcontractors and the contractor is already resolving it. Ask what’s owed, what’s disputed, and when it will be discharged. General contractors often vacate a subcontractor’s lien themselves, because it holds up their own payments.
5. Call your lawyer and tell your lender. A construction lawyer advises on the options below, and your lender will usually stop advancing until the lien is discharged or vacated.
6. Answer information requests within 21 days. A lien claimant can require you to provide the parties to the contract, the contract price, the state of accounts and a copy of any payment bond, within a reasonable time not exceeding 21 days (s. 39(1)). Keep those records current and this takes an afternoon.
7. Get it off title. There are three common routes:
   • The claimant is paid and registers a discharge.
   • Vacating by paying into court. On a motion, the court must vacate the lien if someone pays into court (or posts security for) the full amount claimed plus the lesser of $250,000 or 25% of it for costs (s. 44(1)). On a $200,000 lien that’s $250,000. In practice it’s often the contractor that posts a lien bond to do this, and the dispute continues against the security, not your property.
   • A reduced amount by court order. The court may vacate on payment of an amount it decides is reasonable in the circumstances (s. 44(2)).
8. Watch the deadlines. If the claimant doesn’t perfect within the 90-day window, the lien expires (s. 36(2)), and your lawyer can apply to have it removed from title.

Termination, deficiencies and lenders

If a contract is terminated

Since 2026, a notice of termination (Form 8) has to be published on a construction trade news website within 7 days after a contract is terminated, by the owner, the contractor or anyone else whose lien is subject to expiry (s. 31(6)). The date the first notice is published becomes the termination date for lien purposes (s. 31(7)), and the lien clock runs from it. Publishing doesn’t stop anyone contesting whether the termination was valid (s. 31(8)).

The holdback also stays where it is. If a contract is abandoned or terminated, you can’t use the holdback to pay for replacement work or to satisfy a claim against the contractor until all liens against that holdback have expired or been dealt with (s. 30). Plan for the cost of finishing the work from somewhere other than the holdback. Your lawyer should be part of any termination decision from the start.

Can I keep holdback back for deficiencies?

Not under the Act any more. The notice of non-payment of holdback that used to let an owner keep back holdback for set-off, including incomplete or deficient work, was section 27.1, and it was repealed on January 1, 2026. WeirFoulds puts it plainly: owners can no longer set off against the contractor’s holdback for claims such as incomplete or deficient work.

Deficiencies are still dealt with, but through the invoice and the contract, not the holdback. A progress invoice for work that isn’t done properly can be disputed with a notice of non-payment within 14 days (s. 6.4(2)), and the contract’s warranty, deficiency list and final payment provisions do the rest. Your lawyer should check how your contract handles deficiency holdbacks now that the statutory route has gone, especially if it was written on a pre-2026 template; our guide to the CCDC 2 stipulated price contract covers the payment provisions owners most often amend.

Lenders and priority

Liens generally rank ahead of mortgages (s. 78(1)). For a building mortgage, the one taken to finance the improvement, liens have priority over it to the extent of any deficiency in the holdbacks the owner was required to retain, whenever the mortgage was registered (s. 78(2)). In plain terms: if you paid out holdback you should have kept, the lien claimants can rank ahead of your lender for that amount.

That’s why lenders advance net of holdback, subsearch title before each draw, and stop advancing when a lien appears.

A holdback system for owners

None of this needs special software. It needs one person who owns it and a few records kept current. On the projects we work on that’s usually the owner’s representative or the payment certifier, and it’s set up before the first invoice.

1. A holdback ledger per contract. Value of work certified each month, holdback retained, holdback released, and the running balance. Separate the basic holdback from the finishing holdback. If you have several prime contracts (for example under construction management), each one has its own ledger, as set out in CCDC 17 trade contracts for owners.
2. A calendar of anniversaries. The date each contract was entered into, the date the next notice of annual release is due (anniversary plus 14 days), and the payment window (60 to 74 days after publication). For pre-2026 contracts, mark the second anniversary after January 1, 2026.
3. An invoice review procedure. Who checks the invoice against the contract’s requirements by day 7, who reviews the work by day 14, who signs a notice of non-payment and who pays by day 28.
4. A subsearch before every release. Before each annual release and the final release, have title searched for preserved liens and check whether you’ve received any written notice of lien.
5. Substantial performance worked out in advance. Calculate the threshold for each contract so you know what the certifier is testing against. Agree with the contractor who will publish the certificate and confirm it was published, since that date starts the lien clock.
6. Copies of everything published, with the website and date, and a state of accounts you can produce in a day for a section 39 request or a lender’s draw review.

If you’ve ever wondered what an owner’s representative actually does day to day on a project, this is a fair sample.

Frequently asked questions

How long does a contractor have to file a lien in Ontario?

A general contractor’s lien expires 60 days after the earlier of publication of the certificate of substantial performance or the contract being completed, abandoned or terminated, unless it’s preserved by registering a claim on title (s. 31(2)). Subcontractors have 60 days from the earliest of several dates, including their own last supply. A preserved lien must then be perfected within 90 days by starting an action (s. 36(2)).

How do I remove a construction lien from my property?

The claimant is paid by whoever owes them and registers a discharge, or you have it vacated by court order on payment into court or security of the full claim plus the lesser of $250,000 or 25% for costs (s. 44(1)), or a lower amount the court finds reasonable (s. 44(2)). The contractor usually bonds it off; your lawyer brings the motion.

Am I liable for more than the holdback?

Generally not, if the unpaid party’s claim comes through the contractor: your personal liability is capped at the holdbacks you were required to retain (s. 23). The catch is “required”. If you paid out more than 90% of the work supplied, or paid after receiving written notice of a lien without keeping back enough to cover it, the shortfall is yours (s. 24).

When do I have to release holdback in Ontario?

Every year: publish a notice within 14 days after each contract anniversary and pay the year’s accrued holdback 60 to 74 days later, unless a lien is preserved (s. 26). The rest is paid within 14 days after liens expire at the end. Pre-2026 contracts start at the second anniversary after January 1, 2026.

Can I withhold holdback for deficiencies?

Not since January 1, 2026. The notice of non-payment of holdback (s. 27.1) was repealed. Deal with deficient work through a notice of non-payment on the progress invoice within 14 days and through your contract’s deficiency, final payment and warranty provisions. Have your lawyer check how your contract handles it.

What to do next

If you’re about to sign a contract, put the holdback system above in place before the first invoice: the ledger, the anniversary calendar and the invoice review. If you’re mid-project on a contract signed before 2026, work out when your first mandatory release falls and how much it will be, and tell your lender. If a lien has just been registered, call your lawyer and your contractor today, and hold back enough to cover it.

We’ve spent more than 20 years on office, residential, retail and industrial projects, with experience built at PCL Constructors and Oxford Properties, and we’ve administered payment, holdback and closeout with owners many times. If you’d like an experienced hand to set up the system, certify payments or work through a lien with your lawyer, that’s part of our construction consulting work.