New amendments to Ontario’s Construction Act (OCA) took immediate effect on Jan. 1 through Bill 216 (Building Ontario for You Act, 2024) and refined by Bill 60 (Fighting Delays and Building Faster Act, 2025).
Overall, the amendments represent what Fasken Martineau DuMoulin partners Nora Kharouba and Edward Lynde describe as, “a natural extension of the ongoing commitment to ensuring the timely and predictable flow of funds through the construction pyramid.”
Kharouba and Lynde told the Daily Commercial News the amendments are the result of “sustained industry feedback.”
Deficiencies identified by the industry and the bar surrounded the administration of holdbacks, the scope and timing of adjudication, and the clarity of key statutory definitions. These were supplemented by an independent review in 2024 commissioned by the Ministry of the Attorney General that identified systemic ambiguities, interpretive inconsistencies and operational challenges in the existing legislative framework.
A major change concerns holdbacks. Phased-in holdbacks are no longer an option. Owners are now required to release accrued holdbacks on an annual basis for projects spanning more than a year.
“Owners are required to publish a Notice of Annual Release of Holdback within 14 days of the contract anniversary date,” Kharouba and Lynde continued. “Owners are then required to release the holdback, no earlier than 60 days (i.e. the lien expiration period) and no later than 74 days (i.e. the aforementioned 60-day period plus 14-day period) after the notice is published, so long as no lien has been preserved or perfected in the 60-day period following publication.”
“Once the contractor has received their holdback, they have 14 days to pay the appropriate annual holdback to its contractors at the next tier down, unless there is a lien, and so on down the chain,” said Gowling WLG partner Aaron Hunter.
These official notices, like those covered under the new Form 6 of the OCA, must now be published on designated construction trade news websites, such as the Daily Commercial News. This also applies to multi-phase projects or when work continues beyond the anniversary year.
For contracts signed before Jan. 1, 2026, annual release will start on the second contract anniversary after Jan. 1, 2026. For contracts signed after Jan. 1, 2026, annual release will start on the first contract anniversary.
Kharouba and Lynde further explained while virtually all contracts will ultimately be required to comply with the amendments stipulating the annual release of holdbacks, there are some exceptions and technical requirements specific to P3 contracts, such as contracts under the Construction Lien Act, 1983, as well as some technical requirements as it relates to P3 agreements.
Existing procedures surrounding the release of holdbacks related to other common milestones, such as substantial performance, contract completion or certification of a completion of a subcontract, are not affected, although there will be less available for release at these particular milestones.
Importantly, Bill 60 also ensures the release of annual holdbacks does not trigger the expiration of lien rights.
“Now, for the first time, holdback will be released while lien rights of contractors and subcontractors continue without expiration,” write Margie Strub partners Jay Nathwani and Josh Strub, and associate Simren Sihota.
While the continuation of lien rights has clear benefits, there will be less holdback in the hands of an owner to answer the lien claims of any subcontractors should a contractor default.
“Subcontractors must be vigilant about ensuring they received their share of the annual holdback release, or pursue adjudications before it is too late, as their lien security is effectively diminished by the owner’s holdback release,” they write.
It should also be noted architects and engineers are now deemed to have lien rights for pre-construction services even if no physical improvement is made, provided a holdback was retained.
However, Asif Lasani, partner with Gowling WLG, points out, “the onus is on the owner to prove that the value of the land was not improved if the project does not proceed, a reversal of what previously existed.”
There are also changes to dispute resolutions sought through adjudication.
“Prior to the amendments, the right to adjudicate expired upon the ‘completion’ of the contract,” said Kharouba and Lynde. “This created uncertainty and the potential for competing positions, given that ‘completion’ was not expressly defined in the legislation.”
Now the deadline for parties to commence adjudication is increased to 90 days after contract completion, abandonment or termination.
“The intent behind the amendments is to expand availability of adjudication by offering a longer period to commence the adjudication, while also implementing certainty so that all parties are cognizant of timelines associated with the right to adjudicate,” Kharouba and Lynde said.
Adjudication may now also consider payment disputes and issues that might involve contract interpretation or performance. Private adjudicators outside of the ODACC process are now permitted rather than only selected from the ODACC registry, with fees negotiated between the parties.
Key elements surrounding a “proper invoice” have also been refined.
An invoice is now deemed a “proper invoice” unless the owner provides written notice of a deficiency within seven days of receipt. The seven-day review period prevents owners from later challenging the validity of an invoice to avoid prompt payment obligations.
However, the Margie Strub authors caution while this should improve the proper functioning of prompt payment and associated adjudications, “the changes do not address the fact that contractors are under no obligation to carry subcontractor amounts in the contractor’s proper invoice to the owner. Subcontractors must still close this gap through contract negotiations.”
“The new procedures will require careful planning and updated processes across the industry,” Kharouba and Lynde conclude. “The construction industry and bar alike should expect a learning curve. Such an acclimation period will include adjustments to internal processes and contract templates, evolving adjudication practices and decisions, and judicial guidance as questions of interpretation and operation and contested issues are addressed by the courts.”
