Ontario's Amendments To The Construction Act Take Effect January 1, 2026

Significant amendments to Ontario's Construction Act (the "Act") will come into force on January 1, 2026.

These amendments were first introduced through Bill 216, Building Ontario for You Act (Budget Measures), 2024 ("Bill 216"), and subsequently refined by Bill 60, Fighting Delays and Building Faster Act, 2025 ("Bill 60"), together with a new set of regulations (O. Reg. 266/25, which amends O. Reg. 304/18).

The upcoming changes to the Act will, among other things, create a new statutory framework for holdback, adjudication, bonding, lien and trust procedures, and establish new statutory notices across the construction industry.

This update provides a summary of the key amendments coming into force, and follows our previous bulletins on the Act's proposed amendments under Bill 216 initially, and its related regulatory changes.

Mandatory Annual Release of Holdback (New Default Rule)

Ontario is changing the model for the release of holdback. The amendments are significant as the new regime will require owners to release accrued holdback on an annual basis (for projects spanning more than a year). The key amendments regarding holdback include:

• Owners must publish a notice of annual release of holdback within 14 days after each anniversary of the date the contract was entered into, specifying the amount and intended payment date.¹
• Owners can no longer give notice of non-payment of holdback as this option has been removed.
• Owners must then release holdback accrued during the contract year at least 60 days but not later than 74 days after the publication of the notice of annual release of holdback, provided no lien has been preserved or perfected in that 60-day period.²
• Contractors, and each tier of subcontractors, must then release accrued holdback within 14 days of receiving their annual holdback payment, provided no lien has been preserved or perfected in respect of the relevant subcontract.³
• Annual release of holdback applies even for multi-phase projects or where work continues beyond the anniversary year.⁴
• Existing Forms, including Form 6 (Notice of Non-Payment of Holdback), will be updated to align with the new regime.⁵
• The foregoing rules will not impact the existing procedures regarding the release of holdback following other usual milestones, such as substantial performance, contract completion, or certification of a completion of a subcontract – it will just mean there is less holdback to be released at these particular milestones.
• Notably, the timing for lien preservation, perfection, and expiry remains unchanged despite the legislature's initial attempt in Bill 216 to propose changes to lien expiry rules.

Expanded Scope of Adjudication

Ontario is expanding the scope and flexibility of adjudication under Part II.1 of the Act.

• Adjudicators may now make determinations necessary to resolve payment disputes, including issues that may involve contract interpretation or performance.⁶
• Parties may jointly appoint private adjudicators, provided they meet regulatory requirements and are listed on the registry.⁷
• Parties now have up to 90 days after contract or subcontract completion to start adjudication.⁸

Other Key Amendments: Liens, Trusts, Bonds, and Notices

• Joinder of Lien and Trust Claims: Amendments to O. Reg. 302/18 will expressly allow lien and trust claims to be combined in a single proceeding when they arise from the same or related facts.⁹
• Expanded Bond Access: Updates to Part XI.1 and Form 31 will clarify that sub-subcontractors and other lower-tier claimants may recover under a labour and material payment bond without the need to preserve or perfect a lien.¹⁰
• Statutory Notice Publications: Revisions to O. Reg. 304/18 will designate three "construction trade news websites", Daily Commercial News, Link2Build, and Ontario Construction News, as official platforms for publishing statutory notices, including notices of non-payment of holdback.¹¹
• Proper Invoices: Amendments to Section 6.1 of the Act will deem a "proper invoice" compliant unless the owner provides written notice of the deficiency and required corrections within seven days of receipt of the proper invoice.¹²

Transition Timeline

The amendments coming into force on January 1, 2026 include express transition rules for the annual holdback release regime as follows:

Contracts signed on or after January 1, 2026: Annual holdback release begins on the contract's first anniversary.¹³

Contracts signed before January 1, 2026: Annual release will begin on the contract's second anniversary following January 1, 2026. At that time, the owner must pay all holdback accumulated up to date, and then continue with annual releases going forward.¹⁴ Please note this does not apply to contracts that were subject to the old Construction Lien Act.

All other amendments, including adjudication, joinder of lien and trust claims, bonding, and statutory notices, will apply prospectively to contracts entered into, or procedural steps taken, on or after January 1, 2026.¹⁵

Conclusion

These amendments, coming into force on January 1, 2026, represent a major modernization of Ontario's construction law framework and introduce important changes that directly affect payment structures and timing, dispute resolution procedures, and compliance obligations. The annual holdback mechanism, enhanced adjudication model, and other modernized statutory procedures will require careful planning and updated processes across the industry.

All construction-related entities, and owners in particular, should review contracts, update internal processes, and train project teams to ensure readiness for this new legislative framework.