Holdback changes not impacting lien rules in Ontario

Changes to the holdback provisions of the Ontario Construction Act, which came into force this past January, will not impact lien rights, nor the timing of lien registration and perfection provided under the act, report several Canadian legal firms in recent posts.  

Perhaps the most notable revision to the provincial construction legislation brought forward through Bill 216, the Building Ontario For You Act (Budget Measures), was the introduction of an annual release of holdbacks for multi-year projects in the province.  

Given that such an adjustment would potentially impact lien preservation, perfection and expiry timelines, the province further refined the legislation through Bill 60, the Fighting Delays, Building Faster Act, which decoupled liens and holdbacks. As such, lien rights will continue to be tied to publication of a certificate of substantial performance or project completion, abandonment and/or termination, rather than annual holdback notices.  

On an annual basis, project owners must now publish pending annual holdback releases on a construction trade news website listed in the revised legislation within 14 days of each contract anniversary and then release the holdback annually for work performed in the applicable 12-month period. 

Additional revisions to the Ontario Construction Act brought forward through the two bills also clarify that holdbacks cannot be used to hire a subsequent contractor, nor to cover claims against a contractor or subcontractor prior to the expiry, discharge or vacating of all potential liens, while also providing updates to forms and definitions, and providing the decision that lien claims and trust claims may proceed as a single court action if they stem from the same source. 

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