Changes to Ontario’s Construction Act Took Effect January 1. How Will It Affect Your Business?

As of January 1, 2026, changes to Ontario’s Construction Act will be enforced and this round of updates, introduced by Bill 60, will affect how money flows, how disputes get resolved, and how projects are managed day to day. While prompt payment, adjudication, and lien reforms have been in place for several years now, these latest amendments tighten the rules and remove some flexibility that owners, builders, and trades had gotten used to.

The changes to Ontario’s Construction Act come out of a formal review commissioned by the Ministry of the Attorney General and are now fully in force. Some are housekeeping fixes, but others — especially around holdback and adjudication — are likely to have a real impact on cash flow and dispute strategies across the industry.

Mandatory Annual Holdback Release Is One of the Biggest Changes to Ontario’s Construction Act

The most immediate and meaningful change that Bill 60 introduces to Ontario’s Construction Act is that the 10% statutory holdback must now be released every year. Previously, annual or phased release was optional and only applied to larger contracts. That option is gone.

Going forward, the anniversary date of the contract is even more important. Each year, the project owner must publish a notice saying how much holdback will be released and when. Payment has to follow within a tight window unless there is an active lien. Once the contractor receives holdback, that money must flow down to subcontractors within 14 days, and the same obligation continues down the chain.

Owners can no longer simply publish a notice refusing to release holdback. That right has been repealed, along with the ability for contractors or subs to rely on it to justify non-payment. This change alone will affect project financing, pricing decisions, and how lien rights are used as leverage.

For contracts signed before January 1, 2026, the first mandatory release will not happen until the second anniversary date after January 1, 2026. For contracts signed after that date, annual release applies immediately. Some P3 and AFP projects are exempt, but most private projects are not.

Adjudication Is Expanding and Getting More Flexible

Adjudication was originally designed as a fast way to resolve payment disputes. The recent changes to Ontario’s Construction Act expand that scope significantly. Parties can now take broader contract disputes to adjudication, including disagreements over scope of work, change pricing, and time extensions. Even delay claims can now be adjudicated, which is a big shift for an interim process that produces binding decisions.

There is also more flexibility in who decides these disputes. In addition to choosing adjudicators from the official ODACC roster, parties can now jointly appoint private adjudicators, as long as they are ODACC-certified. This gives companies more choice, but it also comes with higher minimum hourly rates.

Deadlines have also been clarified as part of the changes to Ontario’s Construction Act. In most cases, adjudication must now start within 90 days of contract completion, termination, or abandonment. Adjudicators are explicitly allowed to rule on jurisdiction issues, multiple adjudications can be consolidated more easily, and anonymized decisions will be published publicly, creating helpful precedent over time.

Design Work Before Construction Now Carries Clearer Lien Rights

If a project never moves past the design phase, design professionals may still have lien rights if their work improved the value of the land. The Act now makes this clearer by tying lien rights to whether the owner’s property was enhanced. While design liens are not new, this change removes some of the uncertainty that has existed around pre-construction services.

With the Changes to Ontario’s Construction Act, Proper Invoices Are Harder to Dispute After Seven Days

Several updates were made to proper invoice requirements in Bill 60. Milestone-based payments are now clearly permitted, and owners can request additional information if it is reasonably needed for their accounting systems.

However, there is an important safeguard for contractors, if an owner does not flag a deficiency in a proper invoice within seven days, the invoice is deemed valid under the Act. This is meant to reduce payment delays caused by administrative back-and-forth.

Other Notable Changes From Bill 60 Worth Knowing About

Some of the changes to Ontario’s Construction Act are more technical but still useful. Notices under the Act now have to be published on specific construction trade news sites. Notices of termination must be published within seven days, and the publication date becomes the official termination date.

Lien claims and trust claims can now be combined into a single court action, which may help avoid duplicate lawsuits. Adjudicators can also fix obvious errors or oversights in their decisions within a short window, without reopening the entire process.

What Do These Changes to the Ontario Construction Act Mean for Your Business?

Mandatory annual holdback release will likely be the biggest adjustment for most construction companies. It changes how long money stays tied up on projects and may affect how contracts are priced and financed. It also increases the importance of staying on top of lien timelines and paperwork.

The adjudication changes open the door to resolving bigger, more complex disputes faster, instead of letting them pile up until the end of a project. That could mean quicker outcomes, but also faster consequences if a dispute goes sideways.

Need Clarification on the Bill 60 Changes? Talk to Our Experienced Construction Lawyers

With the Bill 60 changes to the Ontario Construction Act, 2026 marks a turning point in how construction projects are paid for and how disputes are handled in Ontario. For construction company owners, staying informed and getting guidance early when issues arise can make a real difference. 

If there’s uncertainty about how these changes apply to a contract, or if a dispute develops on a project, working with the experienced construction lawyers at Gionet Fairley Wood LLP can help clarify options, manage risk, and keep issues from escalating unnecessarily. Our skilled construction lawyers have extensive experience in Simcoe County, Muskoka, Grey Highlands, and the surrounding areas. Contact us through our website, or call us today at 705-468-1088. 

***The information provided in this blog is for general informational purposes only and should not be construed as legal advice. If you have legal questions, we strongly advise you to contact us.