Substantial performance (construction)

Substantial performance is the stage of a construction contract at which the improvement — or a substantial part of it — is ready for use, or is being used, for the purposes intended. In Ontario it is fixed by statute: once certified and published, a certificate of substantial performance starts the clock for releasing the holdback and other post-completion obligations.

What the Ontario Construction Act says

Under the Construction Act, R.S.O. 1990, c. C.30 (Ontario), section 2(1) provides that a contract is substantially performed when the improvement to be made under the contract, or a substantial part of it, is ready for use or is being used for the purposes intended — subject to statutory limits on the cost of work still to be done. "Substantial performance" is therefore a defined legal threshold, not a matter of the parties' impression that the job "looks done."

The certificate of substantial performance

Section 32 of the Act governs certification. Where a payment certifier has been retained, the payment certifier certifies substantial performance; if there is no payment certifier, the owner and contractor may certify jointly. The certificate must set out the date on which the contract was substantially performed, and the prescribed form is Form 9 — Certificate of Substantial Performance of the Contract under section 32 — under O. Reg. 303/18 (Forms). Critically, the certificate has no effect until a copy of it is published, and Ontario's general regulation (O. Reg. 304/18) requires publication on a construction trade news website. That publication is what makes the date in the certificate effective for lien and holdback purposes.

Why it matters

Substantial performance triggers the release regime for the basic holdback: if no certificate of substantial performance is published, holdback that depends on the certificate does not start coming free. It also matters for lien rights, which time off the certification/publication dates, and it usually marks the handover point for insurance, occupancy and deficiency work. Contract forms used across Canada build their completion and payment milestones around this concept, so both owners and contractors should track the certification date carefully and dispute it early if the work genuinely is not ready for use.

Common questions

Who signs the certificate?

The payment certifier where one has been retained under the contract; otherwise the owner and the contractor jointly. Either way, the certificate states the date of substantial performance, which the Act deems to be the date the event occurred.

What if the owner and contractor disagree that the work is substantially performed?

The Act contemplates court declarations of substantial performance as well as certification — either route fixes the date for holdback and lien purposes. Contractors should not wait for the certificate to be published before raising incomplete work.

Related definitions

Retainage vs. holdback · Change order · Bid bond vs. performance bond