Ontario’s Construction Act changed significantly on January 1, 2026. For construction projects in Toronto and across Ontario, the amendments affect how statutory holdback is released, how lien timelines are preserved, and how parties should administer contracts after abandonment, termination, or project milestones. The amendments were introduced through Bill 216 (Building Ontario For You Act (Budget Measures), 2024) and refined by Bill 60 (Fighting Delays, Building Faster Act, 2025).
Bill 60 received royal assent on November 27, 2025, with most of its amendments taking effect on that date. Changes contemplated in Bill 60 relating to separating annual holdback release from lien expiry, and the transitional P3 rules, have applied since January 1, 2026. The remaining changes originally set out in Bill 216 came into force on January 1, 2026.
This article explains the key holdback and lien changes now in force and highlights practical considerations for Ontario construction contracts, including projects in Toronto, the GTA and elsewhere in the province.
The most important point is this: annual holdback release is now mandatory in many circumstances, but annual holdback release does not create a separate annual lien expiry deadline. That distinction matters for owners managing payment risk, contractors tracking cash flow, and subcontractors preserving lien rights under the Ontario Construction Act.
Annual holdback release and Ontario construction lien deadlines
Bill 216 introduced mandatory annual holdback release and would have required owners to publish a notice of annual release of holdback within 14 days of each contract anniversary. It also would have tied that annual release process to a new lien period for work included in the annual holdback notice. That approach raised concerns for Ontario construction stakeholders because it would have complicated lien preservation, lien expiry and holdback administration on long-term or multi-phase projects.
Bill 60 kept the annual holdback release framework but separated it from lien expiry (sections 26 and 31 of the Construction Act). In practical terms, owners may have annual holdback release obligations, but contractors and subcontractors do not lose lien rights simply because an annual holdback notice is published or an annual holdback payment is made. The familiar lien triggers under section 31 of the Construction Act continue to matter, i.e. publication of a certificate of substantial performance, the completion, abandonment, or termination of contracts, or where applicable, date of last supply.
Expanded protections against holdback after abandonment or termination
Section 30 of the Construction Act restricts how holdback can be used when a contractor or subcontractor defaults. A payer generally cannot apply statutory holdback to pay a replacement contractor or supplier, or to satisfy claims against the defaulting party, until potential lien claims against that holdback have expired, been satisfied, vacated or discharged.
Bill 60 expanded those protections, so they also apply when a contract or subcontract is abandoned or terminated. This is important for project owners, general contractors and subcontractors dealing with replacement trades, project delays, insolvency concerns, or termination disputes.
As such, holdbacks should not be treated as a general project contingency fund after abandonment, termination or default. Before using holdbacks to retain a replacement contractor or resolve project claims, parties should assess whether potential lien claims remain outstanding.
Transitional rules for annual holdback release and P3 contracts
The transition rules are especially important for long-term Ontario construction contracts. The applicable holdback regime depends on when the contract was entered into and, in some cases, whether the project is governed by older Construction Lien Act rules or by a public-private partnership agreement.
For contracts entered into on or after July 1, 2018, but before January 1, 2026, the annual holdback release regime generally begins on the second anniversary of the contract date that occurs after January 1, 2026. At that first annual release point, the owner must address accrued basic holdback up to that date, and annual release obligations continue thereafter. For example, if a contract was signed on June 18, 2025, the first annual holdback release trigger would generally arise on June 18, 2027.
For contracts entered into after January 1, 2026, the new annual holdback release rules apply immediately, with the annual holdback process generally beginning on the first anniversary of the contract date. P3 agreements entered before January 1, 2026, will remain subject to the previous rules about permissive annual holdback release (subsection 87.4(5) of the Construction Act).
Do not assume every project is treated the same way. Owners, contractors and subcontractors should review the contract date, procurement history and project structure before applying the 2026 annual holdback rules.
Need construction lien or holdback advice in Ontario ?
The 2026 amendments to Ontario’s Construction Act create new compliance and payment-administration issues for construction projects across Toronto and Ontario. Mandatory annual holdback release may improve cash flow, but it also requires careful tracking of notices, payment windows, transition rules and lien deadlines. A construction lawyer can help owners, contractors, subcontractors and suppliers assess their obligations, preserve rights and manage disputes before deadlines are missed.
Ontario Construction Act Amendments 2026: Holdback and Lien Changes
Khalil Mechantaf
.jpeg)