How the Amended Construction Act Changes the Game on Lien Claims
On January 1, 2026, key amendments to the Construction Act came into effect, changing holdback payment procedures, allowing joinder of claims, and expanding opportunities for adjudication and other claims. Owners and contractors need to be aware of the new changes when making decisions on their projects or adjudicating disputes.
Annual Release of Holdback is Now Mandatory
Ontario’s Bill 216 (Building Ontario For You Act)[1] in 2024 and Bill 60 (Fighting Delays, Building Faster Act)[2] in 2025 introduced these new changes. Both bills amend the release of holdback: part of the payment for a construction project, which is withheld from contractors until completion, to act as security for liens.
Owners are now required to provide an “annual holdback release”, in which they must publish a notice on their contract’s anniversary each year, assuming the project lasts longer than one year. There is no longer an option to give notice of non-payment. While Bill 216 introduced an annual lien expiry occurring 60 days after publishing the notice, Bill 60 struck out this proposal, leaving the regime largely unchanged.
The following key points stand out:
- The holdback release notice is published no later than 14 days after the anniversary, specifying both the release date and how much holdback will be released.
- Once 60 days have passed following the holdback notice, the owner has another 14 days to release the accrued holdback, unless the lien is preserved or perfected during this timeframe.
- Contractors with their own subcontractors then have 14 days to release the holdback downstream.[3]
The new holdback release model automatically applies to contracts that began in 2026 and onward. For pre-2026 contracts, annual holdback release begins on the second anniversary that comes after the amendments took effect. For example, if your contract for improvement was entered into on July 11, 2025, then you would not need to release holdback until July 11, 2027, at which time you would release all accrued holdback over the contract so far. The annual release schedule would proceed as normal from then on.
All Projects Are Within the Prompt Payment Regime
The “Prompt Payment” system requires owners to make payments (monthly unless contracted otherwise) related to an improvement within 28 days of a “proper invoice” being received, unless a notice of non-payment is issued within 14 days of receipt. While the Construction Act sets out various requirements for a proper invoice, such as a description of services provided or information identifying the contract, the new amendments allow for any invoice to be “proper” even if the requirements are not met.[4]
If, within 7 days of receiving the notice, the owner does not inform the contractor in writing 1) that the invoice is deficient and 2) how to fix the issue, it will be deemed a proper invoice, and the owner must comply with its terms. This applies to both owners and contractors with downstream obligations, so it is essential to stay informed and not be surprised by an invoice you thought you didn’t need to pay.
Amendments to Adjudication
As of January 1, construction disputes may now be adjudicated by anyone who is qualified by the Authorized Nominating Authority, ODACC, as either a private or registry adjudicator.[5] Previously, only those in the registry could be appointed.
Adjudication decisions are now required to be publicly available. Another change is the amended expiry period, which allows a notice of adjudication to be brought within 90 days of the contract being completed, abandoned or terminated, subject to a different agreement being reached between the parties. For subcontracts, the 90-day period begins when either the main contract ends, the subcontract is completed, or when the subcontractor provides services for the final time, whichever comes first.[6]
Joining Lien and Trust Claims
This long-awaited amendment now allows a lien claim and a trust claim to be joined together, so long as they arise from the same facts.[7] Previously, the Act either prohibited such joinders or was left ambiguous, though joining lien claims sharing an owner and premises was allowed. Now, tackling lien and trust issues together may greatly expedite otherwise long and costly litigations.
The newly amended Act will undoubtedly continue to impact the construction industry. For owners seeking to better understand these changes and meet their new obligations, Walker Law’s team of experienced litigators is here to help. Please don’t hesitate to reach out for a consultation.
Tags: Construction Disputes, Civil Litigation Law.
[1] Building Ontario For You Act (Budget Measures), 2024, S.O. 2024, c. 20 – Bill 216, Schedule 4
[2] Fighting Delays, Building Faster Act, 2025, S.O. 2025, c. 14 – Bill 60, Schedule 2
[3] Construction Act, R.S.O. 1990, c. 30, s.26
[4] Construction Act, R.S.O. 1990. c. C.30, s.6.1
[5] Ontario Dispute Adjudication for Construction Contract (“ODACC”)