Ontario Construction Act

What is the Ontario Construction Act?

The Ontario Construction Act is the main law governing construction liens, statutory holdback, trust obligations, and prompt payment on Ontario projects. It replaced much of the old Construction Lien Act and sets rules owners, general contractors, subcontractors, and suppliers must follow to protect payment.

If you build in Ontario, the Act shapes how you invoice, retain holdback, give notices, and register liens.

Key concepts for contractors

Construction liens

Ontario uses construction lien language. Eligible parties who supply services or materials to an improvement may register a lien against the project lands if they are not paid. Deadlines depend on your role in the contract chain and when you last supplied.

Statutory holdback (10%)

Owners must retain 10% holdback from progress payments on most contracts. Holdback helps satisfy valid lien claims. Contractors must also hold back from subs. Treat holdback as a compliance reserve, not optional cash flow.

Trust funds

Payments received for a project often become trust funds under the Act. Using trust money for unrelated business expenses can create serious liability. Separate project accounts and clear job costing help you stay compliant.

Prompt payment and adjudication

Ontario added prompt payment timelines and adjudication for payment disputes. Invoice dates, proper notices, and response windows matter. Adjudication and lien rights are related but separate tools.

How the Construction Act affects your paperwork

Strong documentation supports lien, contract, and adjudication claims:

• Written scope of work and signed change orders
• Dated invoices tied to contract milestones
• Delivery tickets, photos, and daily logs

On the job

Mark lien dates when the job starts. Miss the date and you can lose the claim.

Track holdback on every draw. Owners, lenders, and auditors ask about it at release.

Treat trust rules seriously. Commingling project funds creates personal exposure.

On big disputes, hire a local construction lawyer. One procedural error can void a lien.

Note

This is general info, not legal advice. Ontario construction law depends on project facts and updates over time. Consult an Ontario construction lawyer before registering a lien or starting adjudication.