There are more legal changes coming January 1, 2026 for Ontario’s construction industry. Following an independent review of the Construction Act, the government has introduced amendments to holdback practices and the adjudication process, among others. These changes are designed to increase payment certainty, reduce disputes, and modernize how projects are administered across the province.

Most of the new rules take effect on January 1, 2026, with the notable exception that the changes to the holdback provisions will be grandfathered in for existing projects. Construction industry stakeholders should be preparing now to ensure contracts, internal procedures, and conduct throughout the life of a project align with the new legal regime.

Mandatory Annual Holdback Release

For contracts entered into on or after January 1, 2026, annual release of basic holdback is mandatory on each contract anniversary date.

Owners must now comply with two steps, subject to any notice of liens:

1. Within 14 days of each anniversary of the contract date, publish a Notice of Annual Release of Holdback, and
2. Release the holdback accrued over the past year, without any deduction or set-off, between 60 and 74 days of the publication.

Contractors must then release holdback to subcontractors, without deduction or set-off, within 14 days of receiving holdback from the owner. This process ensures the timely release of holdback for all parties who worked on a project in the previous year.

For contracts entered into before January 1, 2026, the first annual release of holdback is delayed to the second anniversary of the contract date after the amendments come into force. As of the first release of annual holdback, all accumulated basic holdback since the contract started must be released.

For example, if there is a prime contract dated October 1, 2025, the first release of annual holdback will not occur until late 2027, assuming the project has continued to this date. 

There are limited exemptions to the annual release of holdback requirements, such as certain P3 infrastructure projects and contracts subject to the former Construction Lien Act.  

Expanded Adjudication Availability

Ontario’s interim adjudication framework is broadening to include a wider range of disputes, with clarification on when adjudication rights expire.

Adjudication now expressly extends beyond simple payment disputes and includes:

• Contract performance disputes
• Scope of work disagreements
• Requests for contract price changes
• Requests for an extension of time in the completion of work required to be performed under the contract

Previously, a party’s right to adjudication effectively ended when the work was completed. As of January 1^st, parties to a contract (between owner and contractor) have 90 days from the date of completion, abandonment, or termination to commence adjudication. For subcontracts, the parties have 90 days from the earliest of completion, abandonment, termination, certified subcontract completion, or the last date of supply.

Practically, this means that final invoice and holdback disputes can be adjudicated. Even after lien rights expire at 60 days, parties still have an additional 30-day adjudication window.

There are several other changes to adjudication, including rules governing consolidation of adjudication, use of private adjudicators, and publication of adjudication decisions.

Timing of Termination and Proper Invoice Notices

There will now be specific timing requirements for certain notices.

If a contract is terminated, a Notice of Termination must be published within 7 days with a construction trade news website. The date of publication is legally deemed to be the date of termination.

If an owner believes that a submitted invoice is deficient, and does not meet the requirements of a “Proper Invoice”, the owner must provide written notice of this issue within 7 days of receiving the invoice. If the owner fails to do so, the invoice is deemed to be a “Proper Invoice” even if it does not meet all criteria. Prompt payment timelines will then flow from the submitted invoice.

The goal of these amendments is to reduce administrative uncertainty for contractors and subcontractors, and as a result it requires owners to implement timely notice procedures.

Other Changes

There are a number of other procedural changes, including the ability to litigate lien claims and breach of trust claims in a single proceeding, and a list of construction trade news websites that must be used to publish certificates and notices under the Construction Act.

The construction group at Kelly Santini LLP is available to assist your business in navigating these new changes smoothly.