Holdback release timing (Ontario Construction Act)

A holdback is the 10% of the value of services or materials supplied that Ontario's Construction Act requires every payer to withhold from each progress payment. Release timing is not one event but a schedule: an annual release during the work, and a final release once lien periods run out.

What it is

Under the Construction Act, R.S.O. 1990, c. C.30, the holdback is defined as 10 per cent of the value of the services or materials supplied under a contract or subcontract (Part IV, section 22). The payer keeps it as security until the lien regime says it can go. Amendments made by the Building Ontario for You Act (Budget Measures), 2024 rewrote the release rules in section 26, and the new mandatory annual release regime has been in force since January 1, 2026 — so any contract timeline you plan today follows the rules below, not the older substantial-performance release structure.

The mandatory annual release (section 26)

After each anniversary of the date the contract was entered into, the owner must publish a notice of annual release of holdback in the prescribed form — not later than 14 days after the anniversary — specifying the amount of holdback it intends to pay and the intended payment date. The owner must then pay the contractor all accrued holdback for services and materials supplied during the year preceding the anniversary at least 60 days but not later than 74 days after the notice is published, unless a lien has been preserved or perfected against the holdback. The contractor, in turn, must pay its subcontractors their accrued holdback not later than 14 days after receiving it, and the same 14-day rule cascades down the subcontracting chain. Where a preserved or perfected lien blocked payment, the holdback becomes payable not later than 14 days after the circumstances preventing payment cease to apply.

Release at substantial performance and end of project

The certificate of substantial performance (section 32, Form 9) still matters, but under the current section 26 structure the remaining basic holdback — whatever was not already paid through the annual releases — is paid once all liens that may be claimed against it have expired or been satisfied, discharged or otherwise provided for. The owner must pay that holdback to the contractor not later than 14 days after the liens have expired or been satisfied. The Ontario Association of Architects' practice guidance underlines the corollary: if no certificate of substantial performance was ever published, there is no holdback release tied to substantial performance — the full remaining holdback is released following the procedures and waiting periods for a contract deemed completed, abandoned or terminated. Subcontractors get a parallel route: where a subcontract is certified complete (section 33, Form 10), the holdback for that subcontract is released after the 60-day lien period following the certificate of completion. The finishing holdback (10% of the value of the finishing work, section 22(2)) is released under section 27 once the liens against it have expired or been satisfied.

What it means for vendors

Contractors and subcontractors should track three dates on every Ontario job: the contract anniversary (annual notice and 60–74 day payment window), the date the certificate of substantial performance is published (start of the lien clock that eventually frees the remaining basic holdback), and the last day of the applicable lien period plus the 14-day payment rule. Missing the annual notice window delays money for a full cycle, and holdback is trust funds — a payer who withholds it without statutory grounds faces personal liability under section 23. If you are pricing public-sector construction work, model holdback cash flow against these statutory dates, not contract custom.

Common questions

Is holdback the same as retainage?

No. Holdback is the statutory 10% Ontario requires; retainage is any additional amount a contract withholds at its own discretion. See our retainage vs. holdback definition.

Does the annual release apply to every Ontario construction contract?

The mandatory annual release under section 26 took effect January 1, 2026, with transition rules for contracts and anniversaries straddling that date; the old release structure applied to pre-amendment circumstances. Confirm which regime your contract anniversary falls under.

When can a lien stop holdback release?

Whenever a lien has been preserved or perfected and has not been discharged, expired by order, or otherwise provided for — payment is deferred until 14 days after those circumstances end.

Related definitions

Substantial performance · Retainage vs. holdback · Certificate of completion (Ontario) · Progress payment