Welcome to 2026 — Critical amendments to Ontario’s Construction Act have arrived

For Ontario’s construction industry, the start of 2026 marks the implementation of significant amendments to the Construction Act (the Act), which took effect on January 1. It is difficult to believe that it has been over six years since prompt payment, adjudication and major construction lien reforms took effect, bringing in a new regime which has impacted the negotiation of contracts, the resolution of disputes and the day-to-day administration of construction projects.

With the passage of time, we have had the opportunity to adjust to this new world. Feedback has come anecdotally in the form of our collective experiences with the legislation and its regulations. More objectively, sources such as the annual report published by the Ontario Dispute Adjudication for Construction Contracts (ODACC) have provided data on critical issues such as the number of adjudications initiated and completed, the industry sectors in which adjudications have occurred, the subject matter of adjudications, and the amounts at stake.

Following an independent review of the Act that was commissioned by Ontario’s Ministry of the Attorney General (MAG) and prepared by Duncan Glaholt in 2024, MAG introduced legislative amendments, through a combination of the Building Ontario for You Act, 2024 and the Fighting Delays, Building Faster Act, 2025. These amendments, along with the regulations that accompany them, are now in effect.

The amendments include both substantive changes that are anticipated to have a significant impact on construction payments and disputes and clean-up revisions that are intended to improve the overall functioning of the Act.

This update is intended to serve as a guide to critical items which industry participants will need to be aware of.

The amendments include:

• mandatory annual holdback release;
• adjudication reforms, including the scope of adjudications and the availability of “private adjudicators”;
• revisions to lien rights of design professionals for services performed prior to construction;
• the content and administration of proper invoices;
• various additional procedural amendments, as elaborated upon below; and
• transition provisions.

Mandatory annual holdback release

What’s new: The ten percent statutory holdback fund will now be required to be released annually on all contracts (subject to the transition provisions of the Act). This requirement will replace the optional progressive holdback release on an annual or phased basis that was implemented through the previous reforms and was subject to a minimum contract amount. Project agreements entered into with a special purpose entity under an alternative financing or P3 arrangement prior to January 1, 2026, will be exempt from this requirement.

How it will work:

• The critical trigger date will be the anniversary of the date the contract was entered into.
• Within 14 days of the anniversary date, the project owner is required to publish a notice of annual holdback release in a prescribed form, setting out the holdback amount the owner intends to pay and the intended date of payment.
• The owner is required to make payment to the contractor of the accrued holdback from the year immediately preceding the anniversary at least 60 days, but not later than 74 days, after the date on which the notice of annual holdback release is published – unless a lien has been preserved or perfected in respect of the contract.
• The contractor is required, within 14 days of receipt of the owner’s holdback payment, to make payment to a subcontractor of the subcontractor’s accrued holdback from the immediately preceding year, subject to the same restrictions regarding liens, with similar obligations flowing down the construction pyramid for sub-subcontractors and suppliers.
• The owner will no longer have the option to refuse to pay the statutory holdback by publishing a notice specifying the amount the owner refuses to pay.  That option is repealed. The corresponding options for contractors and subcontractors to rely on such an owner’s notice to refuse payment of holdback are also repealed.
• For contracts entered into before January 1, 2026, the first applicable anniversary date will be the second anniversary of the contract date after January 1, 2026. For example, for a contract dated October 30, 2025, the first applicable anniversary date will be October 30, 2027. The first corresponding holdback release will therefore include all accrued holdback as of that date, with holdback accruing annually thereafter.
• The permissive release of a subcontractor’s proportionate share of holdback following a certificate of completion of a subcontract will remain in place.
• The rules for the release of the balance of the statutory holdback fund following the publication of a certificate of substantial performance and contract completion will remain in place.

Private adjudicators

What’s new: There will now be two streams for choosing adjudicators. While parties can still appoint “registry adjudicators” from the ODACC roster, they can alternatively jointly select a “private adjudicator”, who will still be required to be ODACC-trained and certified. The regulations set a minimum charge for private adjudicators of $1,000/hour.  

What it means: Parties will now have the flexibility to choose an off-roster adjudicator, which they may find to be less limiting in some circumstances. Notably, roster adjudicators will not be entitled to also serve as private adjudicators

Scope of adjudications

What’s new: The scope of the subject matters that can now be adjudicated has been expressly expanded to include broad contract disputes pertaining to items such as the scope of work to be performed, a request for a change in the contract price and a request for an extension in time. Disputes over an extension in time under a project agreement with a special purpose entity are not included. Parties remain entitled to refer additional, non-prescribed matters to adjudication by agreement. 

Notably, parties will also be entitled to refer labour and material payment bond disputes to adjudication.  

What it means: There has been much debate within the industry around the parameters for the types of matters that may be referred to adjudication. The expanded scope clarifies that parties will not be restricted to adjudicating mere payment disputes but will also be able to use adjudications for complex delay claims. Given the interim, binding nature of the adjudication process, this change has the potential to significantly alter the path to resolution for such complex disputes – for the parties as well as the lawyers and delay experts they retain. 

Additional adjudication changes

What’s new: Further changes to the adjudication process include the following:

• The deadline for commencing an adjudication will now be 90 days after the date on which the contract is completed, abandoned or terminated (the previous deadline was the date of completion). For subcontractors, the 90-day-period will run from the earliest of the foregoing dates or the date of the subcontract’s certificate completion or date of last supply.
• The Act confirms that adjudicators are entitled to decide challenges based upon jurisdiction and sets out the timing and process for a party who seeks to make such a challenge.
• Any party can require the consolidation of multiple adjudications relating to the same dispute, provided that the appointed adjudicators agree (it was previously only contractors who were entitled to require consolidation).
• Determinations issued by adjudicators will be available to the public on an anonymized basis, with the parties entitled to determine the required redactions. The availability of such information is expected to provide valuable precedents for the industry.

Lien rights of design professionals for pre-construction services

What’s new: Where an owner retains holdback for the supply of a design, plan, drawing or specification for a project that does not proceed, a supplier of those services is entitled to construction lien rights, unless the owner proves that the value of its interest in the land has not been enhanced.

What it means: While lien rights for design work are not new in Ontario, the application of both lien rights and holdback obligations to such pre-construction design services has often been the subject of discussion. Through these revisions, the Act seeks to clarify the circumstances in which such services would attract lien rights. As is the case with many of the changes, it will be interesting to see how a court interprets this amendment.

Changes to proper invoices

What’s new: Various changes have been made to the requirements for proper invoices. The more significant revisions include: the reference to milestone payments for contracts where milestone payments are applicable, the requirement for “any other information that is necessary for the proper functioning of the owner’s accounts payable system that the owner reasonably requests”, and a deeming provision which provides that an invoice is deemed to be a “proper invoice” under the Act, unless the owner notifies the contractor of a deficiency within seven days of receiving it.

What it means: The new language affirms that the Act allows for contractual milestone payments rather than restricting contract payments to temporal payment periods. Moreover, the discretion afforded to owners to request further particulars where they need will hopefully reduce the need for an owner to challenge a proper invoice where there is uncertainty that is attributable only to administrative matters. While there may be concern that such a provision is vulnerable to abuse, the deeming provision that prescribes seven days to identify any deficiencies is presumably designed to counter such concerns. Time will tell how these provisions are used in practice. 

Additional key revisions

• Where notices may be published: For notices for which the Act and its regulations require publication, O. Reg. 304/18 defines “construction trade news website” to include only: Daily Commercial News, Link2Build, and Ontario Construction News. 
• Notices of termination: The Act provides that the prescribed form for a notice of termination of a contract must be published within seven days of termination and that the termination date for the purpose of the Act is the publication date.
• Joinder of lien and trust claims: On a point that was debated in the context of both the prior round of reforms and subsequent case law, the revisions permit a party to join a construction lien claim and a breach of trust action in a single court action. This change should help prevent duplicative court proceedings in an already taxed court system.
• Corrections to determinations in adjudications: Adjudicators may, either on their own initiative or at a party’s request, correct typographical and similar errors within five days after a determination has been delivered to the parties. Adjudicators are also afforded that same timeframe to correct a determination to correct an injustice caused by the adjudicator’s oversight. Such corrections will not require a hearing.  
• Written notices of a lien: The previous round of reforms prescribed a new form for the delivery of a written notice of a lien (i.e. a written notice of lien rights that requires the retention by payers of additional notice holdback funds upon receipt). The revisions allow for a claim for lien that has been delivered or registered in accordance with the Act to be sent as a written notice of a lien, such that a duplicate form does not have to be created. 

Transition

It is critical to understand the transition process for the mandatory holdback release provisions. To recap the above, for contracts entered into before January 1, 2026, the first applicable anniversary date for mandatory holdback release will be the second anniversary of the contract date after January 1, 2026. The first corresponding holdback release will therefore include all accrued holdback as of that date, with holdback accruing annually thereafter.

For contracts entered into after January 1, 2026, the mandatory holdback release, based upon the contract anniversary date, will take immediate effect. 

All other amendments have taken effect as of January 1, 2026, subject to the aforementioned specific exceptions for project agreements entered into with special purpose entities (i.e. for P3 or AFP project structures).The transition provisions under Section 87.3 of the old Construction Lien Act are preserved, such that contracts that are governed by the old Construction Lien Act will continue to be governed by that legislation.

What these revisions mean for industry participants

The most impactful and immediate revisions will likely be the introduction of mandatory holdback release. Given the lengthier and increasingly complex nature of modern construction projects, these changes to the timing of holdback release have the potential to impact everything from pricing, to project financing, to the manner in which lien rights are pursued.

The adjudication reforms may also result in significant changes over time to construction dispute resolution. In particular, it remains to be seen whether it will be more common for large, complex disputes to be referred to adjudicators for resolution, notwithstanding the less-structured and interim nature of an adjudication process. The anticipated benefit is faster dispute resolution, reducing the tendency for parties to let individual disputes accumulate over the course of a project and defer them to lengthy, costly litigation or arbitration. 

Finally, it is hoped that many of the clean-up revisions that are perceived now to be more technical in nature will allow for the smoother overall functioning of the Act. As we have experienced with the previous rounds of changes, the full impacts of these revisions will likely only be understood as they are implemented in practice.

Please do not hesitate to contact the authors to learn more about how these amendments will affect projects, contracts, and construction disputes in Ontario.