Here's When Ontario's 10% Construction Holdback Is Due

If you're renovating your home in Ontario, the Construction Act makes you keep back 10 per cent of the value of the work as it gets done. That money is the holdback. You hold it until the time for a lien runs out. A lien is a claim registered against your home's title by someone who wasn't paid for work on it. On a job where no certificate is published, that time ends 60 days after the contract is completed. You then have 14 days to pay it to your contractor. Pay it early, and you can end up paying it twice. Here is each rule, where it lives, and a $40,000 Toronto kitchen worked through to the day.

Does the holdback apply to your renovation?

Yes, in most cases. The Construction Act binds every "owner". Section 1 (1) defines that as anyone with an interest in the property who asks for the work, where it is done on their credit, on their behalf, with their consent or for their direct benefit. That is you, renovating your own house. The only carve-out is a "home buyer": someone who pays no more than 30 per cent of a home's price before closing and takes it only once it's ready to live in.

The work has to be an "improvement". That includes an alteration, an addition or a capital repair, any construction or installation on the property (including equipment essential to the building's use), and demolition. Section 1 (1.1) says a capital repair extends the life of a building or adds to its value. Maintenance that only prevents normal wear is not one. So a new kitchen, a finished basement or a new roof normally counts.

Section 22 (3) says the holdback applies whether you pay in stages or all at the end. Section 5 (1) says every contract is treated as amended to match the Act. So a payment schedule with no room for a holdback doesn't switch the rule off. And since January 1, 2026, section 7 (1) makes the holdback you must keep trust money for your contractor. You can't spend it on yourself while the contractor is still owed.

Ontario's own consumer pages say none of this. We checked its pages on starting home renovations and hiring a roofer, and its guide for renovation businesses. None mentions a holdback, a lien or the Construction Act.

How much you keep back

Section 22 (1) sets the basic holdback. Each payer "shall retain a holdback equal to 10 per cent of the price of the services or materials as they are actually supplied".

"As they are actually supplied" matters. The 10 per cent comes off each payment for work done, not off the whole contract on day one. Here is a $40,000 Toronto kitchen, signed on Monday, November 2, 2026, and billed in three stages.

There is a second, separate holdback. Once a contract is certified as "substantially performed", section 22 (2) makes you keep 10 per cent of the remaining work too. This is the finishing holdback. Section 27 releases it once the liens on that later work have expired.

When the holdback is due

If no certificate of substantial performance (a signed statement that the work is essentially done) is published, section 31 (2) ends the contractor's lien 60 days after the contract is completed, abandoned or terminated. Section 31 (3) can end a subcontractor's or supplier's lien sooner: 60 days after the day they last supplied work or materials, if that came first. Either way, every lien that isn't preserved (registered on your title) is gone 60 days after completion.

"Completed" has a set meaning. Under section 2 (3), a contract is completed when the work left is worth no more than 1 per cent of the price or $5,000, whichever is less. On the kitchen, that is $40,000 x 1% = $400.

Then section 26 (8) sets your deadline. The owner "shall make payment of the holdback to the contractor not later than 14 days after the liens have expired or been satisfied, discharged or otherwise provided for". A lien that someone did preserve is registered on your title under section 34 (1). Section 36 (2) then gives the holder until 90 days after its preservation deadline to start a court action and note it on your title.

Longer jobs have one more step. Since January 1, 2026, section 26 (2) to (4) requires an annual release: within 14 days after each contract anniversary, the owner publishes a notice (Form 6), then pays the year's holdback 60 to 74 days later unless a lien stands in the way. For contracts signed before 2026, section 87.4 (4) starts this at the contract's second anniversary after January 1, 2026 (a contract signed June 1, 2025 first reaches it on June 1, 2027). A four-month kitchen never reaches it.

A certificate can start the clock sooner

Under section 2 (1), a contract is substantially performed when the work is ready for use and can be finished for no more than 3 per cent of the first $1,000,000 of the price. On the kitchen, $40,000 x 3% = $1,200.

A payment certifier is an architect, engineer or other person whose sign-off triggers payments. Section 32 (1) says that when there's none, you and the contractor decide together and both sign the certificate. The contractor publishes it. If it doesn't within seven days of getting your signed copy, anyone may. The certificate has no effect until it is published. O. Reg. 304/18 names three websites where it must appear: the Daily Commercial News, Link2Build and Ontario Construction News.

Two of the three publish a price. Ontario Construction News shows none on its certificates page, its Form 9 page or its advertising page. Its Form 9 page sends you to checkout without one.

Here is the same kitchen with a certificate of substantial performance. It is ready for use on Friday, February 12, 2027, with a $1,000 range hood on back order. That is under the $1,200 limit. The basic holdback is $39,000 x 10% = $3,900 on the work done so far. The certificate is published on Friday, February 19. Under section 31 (2) and (3), liens for the earlier work expire at the end of Tuesday, April 20. The $3,900 is due by Tuesday, May 4, 2027. The finishing holdback on the hood, $1,000 x 10% = $100, waits for the liens on that later work.

If you pay the holdback early

Section 24 (1) protects payments up to 90 per cent of the work supplied, unless you have received written notice of a lien. The last 10 per cent is not protected. Section 23 (1) makes an owner "personally liable for holdbacks that the owner is required to retain". Required, not retained.

Worked example 2 shows the cost. Say you pay the full $40,000 on February 26. The contractor never pays its countertop installer, who is owed $6,000. The installer registers a lien on your title before its deadline. Because the contractor is the one who defaulted, section 23 (2) caps what you owe the installer at the holdback you should have kept. That is $4,000. The remaining $6,000 - $4,000 = $2,000 is the installer's claim against the contractor, not against you. Your kitchen can end up costing $40,000 + $4,000 = $44,000. Had you kept the $4,000, the claim would have come out of it, and your total would have stayed at $40,000.

If written notice of a lien reaches you before you pay, section 24 (2) protects later payments only if you also keep enough to cover that lien. If the contractor walks off or you end the contract, section 30 bars using the holdback to pay someone else to finish until the liens expire. Since January 1, 2026, section 31 (6) also says the owner or the contractor must publish a notice of the termination within seven days. The lien clock then runs from that date.

Prompt payment applies to you too

Under section 6.4 (1), you pay a proper invoice (a written bill with the details section 6.1 (1) lists, such as the work, the period and the amount) within 28 days. To dispute one, section 6.4 (2) gives you 14 days to send a notice of non-payment (Form 1.1) that states the amount and every reason. Since January 1, 2026, section 6.1 (2) treats an invoice as proper unless you point out what's missing, in writing, within seven days. Section 6.2 keeps the holdback in place, so you still pay only 90 per cent. Late amounts earn interest under section 6.9.

On the kitchen, say invoice 2 arrives on Friday, January 8, 2027. To challenge its form, you have until Friday, January 15. A notice of non-payment is due by Friday, January 22. Otherwise the $14,400 is due by Friday, February 5.

There is no homeowner exception in the Act, and the only exemption in O. Reg. 304/18 is for nuclear facilities. The limit that matters here is timing. Under section 87.3 (4), the rules cover contracts signed on or after October 1, 2019, unless you asked for quotes before then. That is the day the Attorney General announced them "subject to transition rules".

A payment fight, including one over the holdback, can go to adjudication: a fast decision by an adjudicator qualified by the province's adjudication authority, ODACC, that binds you both until a court, an arbitrator or a later agreement replaces it (section 13.15). Section 13.5 (3) allows it until 90 days after the contract is completed, abandoned or terminated, unless you both agree otherwise. The decision is due within 30 days of the adjudicator getting the documents, unless extended. Section 13.10 (3) splits the fee equally, unless the adjudicator finds under section 13.17 that one side acted frivolously, vexatiously, as an abuse of process or other than in good faith, and orders that side to pay some or all of the other's share. ODACC, which keeps the registry of adjudicators, sets a registry adjudicator's fee when the parties and the adjudicator can't agree.

ODACC charges no referral fee to start a claim under $50,000.

Which version of the Act covers your job

People still search for a 45-day release. That was the rule before July 1, 2018. The Act as it read then gave 45 days to preserve a lien and 45 more to start a court action. The Ministry of the Attorney General described the change as extending those timelines "from 90 days to 150 days". Section 87.3 (1) keeps the old Act for a contract signed, or put out for quotes, before July 1, 2018. The January 2026 changes work differently. Section 87.4 (2) applies them to jobs already under way on January 1, 2026, not only to new contracts, unless the job is still under the pre-2018 Act. That covers the 14-day deadline in section 26 (8), the trust in section 7 (1), the end of section 27.1 and, on contracts signed from October 1, 2019, the seven-day invoice rule in section 6.1 (2). Only the annual release starts later for older contracts, under section 87.4 (4).

The holdback sits alongside your other rights as a renovating homeowner, such as the rules on deposits and on cancelling a contract you signed at home.