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The legislative amendments to Ontario's Construction Act (the "Act") resulting from Duncan Glaholt's 2024 independent review for the Ministry of the Attorney General will take effect on January 1, 2026.
We have reported on the development of these amendments, which have changed over time through the Building Ontario for You Act, 2024 ("Bill 216"), the Fighting Delays, Building Faster Act, 2025 ("Bill 60"), and the public consultation and finalization of the regulations to the Act.1
In this bulletin, we cut through the legislative complexity of this history and explain what the construction industry needs to know for the New Year.2
1) Annual Release of Holdback, the Expiry of Liens, and Notice of Termination
Basic holdback will be required to be released annually for all contracts. Presently, annual release of holdback is optional and only available for contracts with a contract price in excess of $10,000,000.
The new holdback regime3 will require owners to,
- publish a notice of annual release of holdback (the new Form 6) in a construction trade news website, within 14 days of the anniversary of the date the contract was entered into; and
- then, release holdback accrued during the contract year at least 60 days but not later than 74 days after the date on which the notice of annual release of holdback is published.
In turn, contractors will be required to release holdback to subcontractors within 14 days of receiving payment from the owner, and so on down through the construction pyramid with subcontractors. Consistent with current holdback release practices, the annual release of holdback will remain subject to the requirement that no liens have been preserved or written notices of lien issued.
The present sections of the Act relating to optional annual holdback release (s. 26.1), optional phased holdback release (s. 26.2), and withholding of holdback by notice (s. 27.1) will all be repealed. This means that (i) terms in existing contracts that currently provide for annual or phased holdback pursuant to ss. 26.1 and 26.2 will no longer be enforceable, and (ii) owners will no longer be able to use a notice of non-payment of holdback to assert set-off rights against the holdback for deficient work or similar claims (given the repeal of s. 27.1).
The timing for the preservation, perfection and expiry of liens will remain the same.
Owners and contractors will be required to publish a notice of termination within 7 days of the termination of a contract.4 The date of publication of the notice of termination will be considered the date of termination triggering the start date for calculating the applicable lien(s).
2) Transition Provisions for Annual Release of Holdback
Contracts entered into on or after January 1, 2026 will have the process for their first notice and annual holdback release starting on January 1, 2027 or later, depending on the date the contract was entered into.5
For contracts entered into before January 1, 2026, the trigger for the first annual holdback release is the second anniversary of the contract date after the amendments come into force. For example, a contract dated March 19, 2025 will have its first annual release of holdback on March 19, 2027. At such time, the annual basic holdback release will include all accrued basic holdback up to that first annual holdback payment.6
Contracts for special purpose entities within P3 arrangements will be exempted from annual holdback release if they are (i) entered into before January 1, 2026 and (ii) fall within the type(s) of P3 project agreement prescribed by regulation.7 The present holdback regime will continue to apply to those contracts. At the time of writing, no such regulation has been issued.
Contracts currently governed by the Construction Lien Act will also remain unaffected by the amendments, including the new annual release of holdback regime. For those contracts, the provisions of the Construction Lien Act will continue to apply.8
3) Further Restriction on Use of Holdback
Presently, where a contractor or a subcontractor defaults in its performance, a payer may apply holdback funds towards obtaining services or materials in substitution for those that were to have been supplied by the defaulting party and towards any other claims once all liens that may be claimed against the holdback have expired or been satisfied, discharged or otherwise provide for under the Act (s. 30 of the Act).
That may no longer be the case. The Act now only expressly permits payers to apply holdback funds in this manner where the contractor or subcontractor has abandoned or terminated their contract or subcontract.9
4) Adjudication
There have been significant reforms to the adjudication regime in respect of the scope of matters that may be adjudicated, the timeline to commence an adjudication, the ability to consolidate related disputes, the availability of private adjudicators, the jurisdiction of adjudicators, and the publication of anonymized determinations.
Scope of matters that may be adjudicated
Presently, adjudication is largely limited to payment-related issues. Going forward adjudication will be available for broader contractual performance issues, such as the scope of work, change in the contract price, and request for extension to complete work.10 This expanded scope of adjudicable issues moves adjudication closer to a "one-stop shop" for many of the disputes that commonly arise on construction projects.
Timeline to Commence Adjudication
Presently, the automatic availability of adjudication ends with completion of the subject contract or subcontract. Going forward, in the case of a contract, parties will have 90 days after the date on which the contract is completed, abandoned or terminated to deliver a notice of adjudication, after which adjudication is no longer available (unless the parties agree otherwise).11 In the case of a subcontract, the 90-day period runs from the earliest of, completion, abandonment, termination, certified completion, or last supply.12
As such, disputes involving final invoices can now be adjudicated and the adjudication period now extends itself 30 days beyond the 60-day lien preservation timeline. Parties missing the deadline to lien therefore still have 30 days to adjudicate.
Ability to consolidate related disputes
Going forward, any party will have the option to consolidate adjudications relating to the same improvement (with the agreement of the adjudicators).13 Previously, only contractors could require such consolidation.
Availability of private adjudicators
Going forward, parties will be able to select a private adjudicator of their own choice, rather than being limited to selecting from ODACC's roster, provided that the individual meets the prescribed qualification and training requirements. This option may be attractive to those dealing with complex or high-value disputes where a particular subject-matter expertise is preferred. The hourly rate of private adjudicators will be fixed at a minimum of $1,000 under s.21(b) of the Regulation and a total adjudicator fee in an amount to be determined will be payable to ODACC.14
Jurisdiction of Adjudicators
The amendments clarify and reaffirm that adjudicators can determine their own jurisdiction to conduct an adjudication. Any objection that a matter falls outside an adjudicator's jurisdiction in the conduct of an adjudication must be raised by the objecting party at the earliest opportunity when making submissions.15 Parties should therefore be prepared to advance jurisdictional arguments at the outset, rather than holding them back for later challenges.
Publication of Anonymized Determinations
The new regulations provide for public access to anonymized adjudication determinations on ODACC's website. The scope of redactions will be determined by the parties to the adjudication.16 We expect that, over time, this will provide the industry with a growing body of precedents, while keeping the identities of parties confidential.
5) Deemed Liens for Pre-construction Services
Presently, engineers, architects, surveyors and other similarly qualified professionals have no lien right for their pre-construction services unless they can establish that their work enhances the value of the lands. Going forward, a person who supplied such professional pre-construction services will be deemed to have a lien over the owner's interest in the premises for the price of those services where the owner has retained a holdback, unless the owner proves that the value of the land has not been enhanced.17
6) Proper Invoices and the "Deeming Rule"
Going forward, a proper invoice must now satisfy a set of 7 specific criteria enumerated under s.6.1(1). One of these criteria is the requirement to provide any information that an owner reasonably requests and needs in order to understand, assess and process the invoice.18
If an owner considers an invoice to be improper or deficient because it does not meet the requirements of s.6.1(1), the owner must, within 7 days of receiving the invoice, specify in writing the alleged deficiency and what is required to address it. If the owner fails to provide such written notice within that 7-day period, an otherwise non-compliant invoice will be deemed to be a proper invoice, even though it does not strictly meet all formal requirements.19
These changes are intended to require timely clarification regarding any deficiencies in an invoice. As a result, owners will need to be vigilant in reviewing invoices when submitted and contractors will have greater certainty that, absent timely and specific objections, their invoices will trigger the prompt payment timelines and related remedies.
7) Other Technical and Procedural Amendments
A series of more technical amendments will also come into force, aimed at streamlining procedures, reducing duplication, and making more information available about claims.
Joinder of lien and breach of trust claims
Parties will be able to join a lien claim and a breach of trust claim in a single court proceeding.20 This allows lien rights and trust obligations to be dealt with together, thereby reducing duplicative litigation and potentially saving time and costs.
Holdback amounts are trust funds
Part II of the Act (Trust Provisions) have been changed to clarify that amounts retained as holdback constitute a trust fund, which may be discharged through the payment of the holdback.
Definition of "construction trade newspaper" clarified
The formerly broad definition of "construction trade newspaper" has been narrowed to the following three specific construction trade news websites to avoid confusion21
8) Concluding Comments
The imminent coming-into-force of the changes discussed above will reshape key elements and provisions of the Construction Act.
As January 1, 2026 is fast approaching, it is crucial that participants in Ontario's construction industry have a solid grasp of the new timelines and rules that will immediately apply. Stakeholders should act now to review existing agreements and payment practices, update internal processes, and negotiate future contracts with these imminent changes foremost in mind.
McMillan LLP will continue to monitor the status and implementation of the amendments to the Construction Act. If you have questions, please contact the authors of this bulletin and our team would be pleased to discuss with you this important piece of legislation and its potential impacts on your business.
Footnotes
1. See O. Reg. 264/25: Adjudications Under Part II.1 of the Act, O. Reg. 265/25: Procedures for Actions Under Part VIII, O. Reg. 266/25: General, O. Reg. 267/25: Forms; these replacement regulations will come into force on January 1, 2026 as per Order in Council 1523/2025.
2. See previous McMillan bulletins: "From Holdbacks to Terminations: Navigating Bill 60's Construction Act Amendments" (November 4, 2025); "The Regs are Coming! Proposed Regulations to Ontario's Construction Act Released for Comment" (September 3, 2025); "Coming Soon? – The Latest Revisions to Ontario's Construction Act" (August 7, 2025); "Ontario Passes Amendments to Construction Act Following Independent Review" (November 12, 2024).
3. Construction Act, RSO 1990, c C.30, s. 26.
4. Construction Act, RSO 1990, c C.30, s. 31(8).
5. Construction Act, RSO 1990, c C.30, s. 87.4(2).
6. Construction Act, RSO 1990, c C.30, s. 87.4.
7. Bill 60, Schedule 2, s. 7(1).
8. Construction Act, RSO 1990, c C.30, s. 87.4(1).
9. Bill 60, Schedule 2, s. 5.
10. O. Reg. 264/25: Adjudications Under Part II.1 of the Act, s. 19(1).
11. Construction Act, RSO 1990, c C.30, s. 13.5(3).
12. Construction Act, RSO 1990, c C.30, s. 13.5(3.1).
13. Construction Act, RSO 1990, c C.30, s. 13.8(2).
14. O. Reg. 264/25: Adjudications Under Part II.1 of the Act, s. 23.
15. Construction Act, RSO 1990, c C.30, s. 13.12.1.
16. O. Reg. 264/25: Adjudications Under Part II.1 of the Act, s. 16.
17. Construction Act, RSO 1990, c C.30, s. 14(4).
18. Construction Act, RSO 1990, c C.30, s .6.1(1) item 6.1.
19. Construction Act, RSO 1990, c C.30, s. 6.1(2).
20. O. Reg. 265/25: Procedures for Actions Under Part VIII
21. O. Reg. 266/25: General.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2025
