October 20, 2026

Substantial Performance in Ontario: Certificate and Takeover

Substantial performance is the point at which Ontario’s Construction Act treats a construction contract as essentially done. Two things have to be true: the building, or a substantial part of it, is ready for use or being used for its intended purpose, and what’s left can be finished 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. The payment certifier signs a certificate saying so, and once it’s published the lien clock starts and the end of the holdback comes into view.

If your contractor has just asked for the certificate, that’s normal: the Act expects the contractor to apply. People also search for “substantial completion”; in Ontario law the term is substantial performance, and we use both here. It isn’t legal advice, and where money is in dispute a construction lawyer should read your contract.

What substantial performance means in Ontario

The definition is in section 2(1) of the Construction Act. A contract is substantially performed when:

1. the improvement, or a substantial part of it, is ready for use or is being used for the purposes intended, and
2. the improvement can be completed, or a known defect corrected, at a cost of not more than 3% of the first $1,000,000 of the contract price, 2% of the next $1,000,000 and 1% of the balance.

Both halves matter. A building can be almost finished in dollar terms and still not be usable, or in use with a lot of work outstanding. Neither passes on its own.

The 3/2/1% test, worked out

The allowance shrinks as a share of the price as the job grows:

On any contract over $2 million the shortcut is: $50,000 plus 1% of everything above $2 million.

Three details change the number in practice:

• The contract price includes changes. The Act’s definition of “contract” includes any amendment to it (s. 1(1)), so the test runs on the price as revised by approved change orders, not the number on the day you signed. A $10 million contract that has grown to $10.6 million through changes has a threshold of $136,000.
• Work you’ve agreed not to finish comes off the price. If you and the contractor agree that some of the work won’t be completed promptly (landscaping held until spring is the classic case), its price is deducted from the contract price before the test is applied (s. 2(2)). It doesn’t count as remaining work that could sink the test.
• Adjudication results move the price. If an adjudicator has decided that money is owed or was overpaid before the certificate is signed, that amount is added to or deducted from the contract price for this purpose (s. 2(2.1)).

Substantial performance is not total performance

A second threshold comes at the very end: a contract is deemed completed when what’s left is worth no more than the lesser of 1% of the price and $5,000 (s. 2(3)). That’s the line for liens on work done after substantial performance.

Who certifies substantial performance, and how it’s published

Section 32 of the Act sets out the procedure.

1. The contractor applies. The certificate starts with an application from the contractor (s. 32(1) para 1). On a CCDC job, the contract adds what has to come with the application.
2. The payment certifier decides. If the contract names a payment certifier, usually the architect or prime consultant, that person determines whether the test in section 2 is met and, if it is, signs the certificate in the prescribed form. If there’s no payment certifier, you and the contractor make the decision together and both sign.
3. The certificate states the date. Whoever signs sets out the date the contract was substantially performed, and that date is deemed to be the date it happened (s. 32(1) paras 2–3).
4. Copies go out within 7 days. A payment certifier gives a copy to you and the contractor within seven days of signing (para 4).
5. The contractor publishes it. The contractor publishes a copy as the regulations set out (para 5). If it hasn’t done so within seven days of receiving the signed copy, anyone can publish it, including you (para 6).
6. Nothing happens until it’s published. The certificate has no effect until a copy has been published (para 10).

The certificate is Form 9 under O. Reg. 303/18. It has to include the names and addresses for service of you and the contractor, the payment certifier’s name and address, a short description of the improvement, the date of substantial performance, and the legal description of the property including the PIN (s. 32(2)). Under O. Reg. 304/18 it’s published on a construction trade news website, and the three named are The Daily Commercial News, Link2Build and Ontario Construction News.

Anyone can ask the contractor in writing to confirm the date and place of publication, and it has to answer within a reasonable time (s. 39(4)); keep that with your holdback records. If certification is refused or delayed unreasonably, anyone can apply to court for a declaration of substantial performance (s. 32(1) para 7). A certifier who refuses to certify within a reasonable time when there’s no reasonable doubt the test is met can be liable to anyone who suffers damages as a result (s. 32(3)).

So the certificate isn’t something to hold back as leverage. The question is narrow: is the building ready for use, and is the cost of what’s left under the threshold? Your influence is in how carefully the remaining work is listed and priced.

What to do when the application arrives

• Confirm who the payment certifier is. On CCDC 2 – 2020 it’s the Consultant, who reviews the Work to determine both substantial performance and Ready-for-Takeover (GC 2.2.15, per the OAA’s practice tip on CCDC 2 – 2020). On a design-build job under CCDC 14 it’s the Payment Certifier named in the contract. On a small job with no certifier, it’s you and the contractor jointly.
• Ask for the contractor’s list of incomplete and deficient work with a value against each item, and have the certifier walk the building against it.
• Check what your contract says the application has to include and how long the certifier has to respond. Read GC 5.4 and your supplementary conditions together; owners often change both.
• Diary the dates. Signing, copies, publication, and 60 days after publication. The last one is when the general contractor’s lien rights on work to that date expire if not preserved (s. 31(2)).

Ready-for-Takeover under the CCDC contracts

Until 2020, substantial performance did two jobs on a CCDC project: it was the statutory milestone for holdback and liens, and it was the contract’s milestone for warranty, insurance and the end of the contract time. CCDC 2 – 2020 split those apart. It added Ready-for-Takeover, which the OAA describes as “a purely contractual milestone”, introduced because lien law varies across Canada and some provinces don’t use substantial performance at all. In Ontario, the OAA notes, the Construction Act requirements “are unaffected by Ready-for-Takeover”: certification of substantial performance, release of holdback, deemed completion and release of finishing holdback all remain.

The same milestone now runs through the family. CCDC 5A and 5B – 2025, the construction management forms, and CCDC 17 – 2025 now carry Ready-for-Takeover and let the owner take early occupancy before it (BLG, July 2025), and CCDC 14 – 2026, the design-build form, puts it at GC 12.1 with the Payment Certifier confirming it (Fasken via Mondaq, June 2026). Our articles on CCDC 5A vs 5B and CCDC 14 design-build cover how each form handles it.

What Ready-for-Takeover requires under CCDC 2 – 2020

Under GC 12.1 the prerequisites are, as MLT Aikins (April 2021) summarizes them:

• substantial performance of the Work certified or verified by the Consultant;
• evidence of compliance with the requirements for occupancy, or an occupancy permit;
• final cleaning and waste removal;
• operations and maintenance documentation delivered;
• as-built drawings completed to date delivered;
• start-up testing needed for immediate occupancy completed;
• the Owner able to secure access to the Work, if the contract requires it;
• demonstration and training scheduled, if the contract requires it.

The contractor applies, and the Consultant has 10 calendar days to confirm the Ready-for-Takeover date or say why the Work isn’t ready. Under GC 12.1.2, Ready-for-Takeover isn’t held up if a prerequisite is delayed for reasons beyond the contractor’s reasonable control, or if you and the contractor agree (Torkin Manes, February 2021). The OAA advises that the list in GC 12.1.1 is the minimum and that changing it takes a supplementary condition, which should be avoided. Project-specific requirements belong in the specifications.

Substantial performance and Ready-for-Takeover side by side

So you have two dates to manage. Substantial performance runs the lien and holdback timetable. Ready-for-Takeover is the date in your Agreement and, as we put it in our CCDC 2 guide, a much better match for “can I move in and operate?”. The OAA expects Ready-for-Takeover to land closer to deemed completion than to substantial performance, which is worth knowing when you plan a move-in date or a tenant’s possession date.

What changes on the day of substantial performance

Some of these run from substantial performance and some from Ready-for-Takeover, so the second column matters.

The trust row doesn’t change what you owe; it means that money isn’t yours to redirect.

Insurance at handover

Builder’s risk and wrap-up policies end at a contract milestone, and the 2020 form moved it to Ready-for-Takeover (GC 11.1). Call your broker as soon as the schedule shows a takeover date: when the builder’s risk ends, when your property policy starts, how early occupancy is covered, and what your lender needs named.

Moving in before everything is finished

Occupancy is a Building Code question, separate from both contract milestones. Under section 11 of the Building Code Act, a newly erected building, or part of one, can’t be occupied or used until the Code’s requirements are met, except as the Code allows. The Code allows occupancy of an unfinished building under Division C, Subsection 1.3.3, with a permit from the chief building official.

In Toronto, that permit for a Part 3 building (larger and more complex buildings, most commercial and multi-residential work) is an Authority to Occupy. The City’s guide, updated November 2024, sets out how it works:

• you consult the building inspector first, who confirms the building is ready for an application;
• the application goes in at least 10 business days before the proposed occupancy date, describing the area to be occupied;
• the architects and engineers of record submit reports before the occupancy inspection confirming they’re satisfied with the work in those areas;
• a separate permit is needed for each stage of occupancy;
• Fire Services and the Electrical Safety Authority approvals have to line up with it.

Occupying without the permit can lead to an order to vacate. Other municipalities have their own forms and lead times, so ask your building department early.

Separately, under CCDC 2 – 2020 GC 12.2 you can take early occupancy of part or all of the Work before Ready-for-Takeover, with the contractor’s agreement, which can’t be unreasonably withheld (Torkin Manes). The occupied part is then treated as taken over: you become responsible for its care, and its warranty starts on the occupancy date. The contractor is still responsible for reaching Ready-for-Takeover for the whole job.

Early occupancy is often worth it, for a retailer opening for a season or a tenant starting fit-out. The cost is administrative: deficiency reviews by area, warranties starting on different dates, and insurance that follows the occupied areas. Agree each in writing and record the area’s condition on the day you take it.

The deficiency list

The deficiency list (some contracts call it the list of incomplete and deficient work) is the document the end of the project runs on. The certifier relies on its value to decide whether the test is met, the contractor schedules the finishing work from it, and any money held back under the contract is calculated from it.

How it’s built

1. The contractor walks its own work first and produces a list by room or area, with every item described clearly enough that a trade can find and fix it without asking.
2. The consultant team reviews. The architect and the engineers walk the building against the contractor’s list and add what’s missing. Mechanical and electrical items usually need their own walk, often with the commissioning agent.
3. You or your representative walk it too, looking at it as the person who will run the building: doors that don’t latch, finishes in the wrong colour, missing signage, rooms that don’t work the way the drawings promised.
4. Each item gets a value, priced as the cost to finish or correct it. That’s the number that goes into the substantial performance test.
5. The list gets a schedule. Waterloo’s supplementary conditions to CCDC 2 – 2020 (May 2023) are a good public example: just before the certificate is issued, the contractor and consultant set a schedule for completing the work and correcting deficiencies, and the construction schedule is deemed amended to include it.

Keep one list, held by one person, with a photograph and location on each item.

Pricing it against the threshold

The value of the list is what tells the certifier whether the test is met. If the contractor’s list for a $10 million building comes to $95,000 and the certifier’s walk adds $20,000, the total of $115,000 is still under the $130,000 threshold. If the consultant’s additions take it to $160,000, the building isn’t substantially performed yet, however close it looks. Price items at what it would cost to have them done, not at a nominal amount.

How much to hold back for deficiencies

This is where the 2026 amendments matter. Until the end of 2025, section 27.1 let an owner publish a notice of non-payment of holdback, which was used in practice to keep holdback against deficient work. That provision was repealed on January 1, 2026. Holdback is for the people down the payment chain. The OAA and the Ontario General Contractors Association said as much in a joint statement back in 2012: the 10% lien holdback “is not intended to be retained by an owner as leverage or penalty because of deficiencies not corrected by a contractor or trades.”

Money for deficiencies is held under the contract instead. The same joint statement describes the mechanism: the value of incomplete work calculated from the deficiency list is the money held for deficiencies, and it isn’t certified for payment until the work is done. That’s simply not paying for work that hasn’t been done yet, and it sits apart from the statutory 10%. Some owners set the amount held at a multiple of the list’s value in their supplementary conditions, to cover the cost of bringing someone else in if it comes to that. Agree that figure before the contract is signed, not at the end. For a progress invoice that includes work you don’t accept, the tool is a notice of non-payment within 14 days of receiving the invoice (s. 6.4(2)).

Waterloo’s conditions also go further on documents: manuals, as-builts, warranties and test reports come before the application, and at final payment the owner can hold an amount the Consultant sets for any documents still outstanding.

From substantial performance to final completion: a closeout checklist

Closeout is worth running as its own small project, with a list and one person responsible. Ask for these, roughly in this order:

1. The published certificate of substantial performance, with the website and date of publication. Ask the contractor in writing for confirmation if you didn’t see it go up (s. 39(4)).
2. The deficiency list with a completion schedule, signed off by the consultant, and an agreed amount held against it under the contract.
3. Occupancy permission for the areas you’ll use, with the professionals’ reports that supported it.
4. Start-up and commissioning reports for mechanical, electrical, life-safety and building automation systems, including testing and balancing.
5. Operations and maintenance manuals, in the format your property manager will use.
6. Demonstration and training for your operations staff, with attendance recorded. Schedule it when the people who’ll run the building can attend.
7. As-built drawings, marked up during construction and then completed, in the electronic format your contract names.
8. Warranties and guarantees, the contractor’s one-year warranty plus every longer product and system warranty in the specifications (roofing, glazing, mechanical equipment), with start dates confirmed against Ready-for-Takeover or early occupancy. The OAA’s practice tip points out that equipment can be running for months before Ready-for-Takeover, so check when each manufacturer’s warranty actually starts.
9. Spare parts, attic stock and keys, counted and signed for.
10. Ready-for-Takeover confirmation from the consultant, with the date.
11. Insurance handover: confirmation that your property policy is in force and the builder’s risk end date.
12. A current WSIB clearance certificate for the contractor, before the final payment.
13. A statutory declaration on CCDC 9A – 2018, which CCDC describes as a sworn statement the contractor gives as a condition of receiving payment on the second and later progress applications or the release of holdback. Ask for a current one with the holdback release application, not only the last progress draw. The form is free from CCDC.
14. Lien searches before releasing holdback, after the 60 days have run, done by your lawyer.
15. Release of the basic holdback within 14 days after liens have expired or been dealt with (s. 26(8)), then the finishing holdback once liens on that later work have expired (s. 27).
16. Final payment once the deficiency list is cleared and the documents are in.
17. A warranty review before the one-year warranty ends, with the contractor, so anything found in the first year is logged in time.

Item 17 is the one most often missed. Book a walk ten or eleven months after takeover with your facilities team’s list, and send the contractor one consolidated warranty list while there’s still time for them to act on it under the warranty.

Frequently asked questions

What is substantial completion in construction in Ontario?

Ontario’s Construction Act calls it substantial performance. A contract is substantially performed when the building or a substantial part of it is ready for use or being used for its intended purpose, and what’s left can be completed 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 (s. 2(1)). On a $10 million contract, that’s $130,000.

Who determines substantial performance?

The payment certifier named in the contract, usually the architect or prime consultant, decides on the contractor’s application and signs the certificate (Form 9). If the contract has no payment certifier, the owner and the contractor decide jointly and both sign (s. 32(1)). The contractor then publishes it on a construction trade news website, and it has no effect until it’s published.

Is substantial completion the same as substantial performance?

People use the terms interchangeably, and some contracts say “substantial completion”, but Ontario’s statutory term is substantial performance. CCDC 2 – 2020 and the newer CCDC forms add Ready-for-Takeover, a contract milestone on or after substantial performance that starts the warranty, the waiver of claims and the insurance change.

Can I move in before substantial performance?

Sometimes. Occupancy depends on the Building Code, not the contract: an unfinished building can be occupied only with permission from the chief building official, which in Toronto is an Authority to Occupy, applied for at least 10 business days ahead. Under CCDC 2 – 2020 you can also take early occupancy with the contractor’s agreement, and that part’s warranty then starts on the occupancy date.

What happens if the contractor won’t fix deficiencies?

Start with the contract. Work that isn’t done isn’t certified for payment, and your contract may let you hold an agreed amount against the list. Put outstanding items in writing with dates. If they still aren’t done, most contracts let you have the work completed by others and charge it back, a step a construction lawyer should guide. Don’t use the statutory holdback for it.

What to do next

If your contractor has applied for the certificate, do four things this week: work out the threshold on the current contract price, ask for a priced deficiency list, check who your payment certifier is and what your contract asks them to review, and call your broker about the takeover date. If you’re earlier in the job, put the closeout list into your specifications and supplementary conditions now, and write the milestone you mean into every lease, loan and sale agreement: substantial performance for holdback and liens, Ready-for-Takeover for possession and warranty, occupancy permission for moving people in. Recalculate the threshold whenever approved changes move the price; our article on where change orders come from covers what moves it.

We’ve spent more than 20 years on office, residential, retail and industrial projects, with experience built at PCL Constructors and Oxford Properties. Certifying substantial performance, running deficiency lists and managing closeout through to the last holdback payment is part of our construction consulting work. If you’d like an experienced hand beside you for the last few months of a project, we’re glad to talk it through.