What Happens When a Subcontractor Does Not Get Paid in Ontario
It is an all too common problem in the construction industry – a subcontractor does not get paid, even after completing their work properly and on time.
As a subcontractor, you showed up, did the work, supplied materials, and now you are waiting to be reimbursed. Days turn into weeks, and the answers you get are vague or delayed.
For a long time in Ontario, the standard advice when a subcontractor did not get paid was simple – file a construction lien. That is still an important option, but under the Construction Act following the 2026 updates, it is no longer your only option, and in some cases, it may not even be your best first step.
As trusted litigation lawyers experienced in construction law, these are some of the things we have observed that have changed in Ontario recently.
Construction Liens: The Traditional Option When a Subcontractor Does Not Get Paid
A construction lien gives you a legal claim against the property where you did the work. It is similar to how a bank secures a mortgage. If you are not paid, you may be able to force a sale of the property to recover what you are owed.
However, liens come with strict deadlines. In most cases, you have 60 days to register your lien and 90 days after that to start a lawsuit. If you miss those deadlines, your lien rights are gone.
That is why it is important to understand the other tools now available when a subcontractor does not get paid and why it is essential to work with a litigation lawyer.
New Payment Rules Under the Ontario Construction Act (2026 Updates)
Under the Ontario Construction Act, contractors and owners now face stricter payment obligations.
When you send an invoice, it is now considered “proper” unless the other side tells you what is wrong with it within seven days. This helps prevent unnecessary delays. If you are not paid on time, the contractor must send you a formal notice explaining why. If they do not, that can strengthen your position and allow you to take further steps quickly.
In short, silence or delay is no longer acceptable under the law in situations where subcontractors do not get paid.
Adjudication: A Faster Option When a Subcontractor Does Not Get Paid
One of the biggest changes to the Ontario Construction Act in 2026 is the expanded use of adjudication.
Adjudication is a fast process where a neutral decision-maker reviews the dispute and issues a binding decision, often within a few weeks. You can now start this process even after the project has ended, as long as you are within the updated timelines.
You can use adjudication for issues like unpaid invoices or disputes over how much work is worth. In many cases, this is faster and less expensive than going to court. Adjudicators can come from the Ontario Dispute Adjudication for Construction Contracts system, or you and the other party can agree to use a private adjudicator. For many subcontractors, this is the most practical first step.
Annual Holdback Release and Why It Matters
Another important change in 2026 is the mandatory annual release of holdback on long projects. If a project lasts more than one year, the owner must release the accumulated holdback each year. Once that money is paid to the contractor, it must be passed down to subcontractors within 14 days.
The key point is that the money cannot simply be held back indefinitely anymore. Unless a lien has been filed, it must be paid. This gives subcontractors a more predictable opportunity to receive at least part of what they are owed when they do not get paid in full.
Trust Claims: Personal Liability for Non-Payment
Many subcontractors are not aware that the law treats construction funds as trust money. When a contractor is paid for a project, they are supposed to hold that money in trust for the people below them, including subcontractors and suppliers. They are not allowed to use that money for other projects or general business expenses.
If they do, it may be a breach of trust which can lead to a trust claim. The practical significance of this lies in its reach. Unlike a lien, which attaches to property, a trust claim can extend to directors, officers, and others who control the money and may be held personally liable if they participate in a breach of trust.
As well, the 2026 changes to the Construction Act make this remedy even more useful because you can now bring a trust claim together with a lien claim in the same lawsuit, which can save time and cost. This option is especially important in situations where a subcontractor does not get paid because the company who contracted out the job is in financial trouble.
What to Do If You Miss a Construction Lien Deadline
Missing a lien deadline does not mean you are out of options. You can still sue for breach of contract if you have an agreement with the party who owes you money. You generally have two years to start that claim.
In some cases, you may also be able to claim unjust enrichment against an owner, even if you did not have a direct contract with them. This applies where the owner benefited from your work, but you were not paid, and there is no legal reason for them to keep that benefit.
These claims are not as strong as a lien, but they can still help when a subcontractor does not get paid and lien rights are no longer available.
Payment Bonds and Alternative Recovery Options
On some projects, there is a labour and material payment bond in place. This is a type of insurance that can cover unpaid subcontractors. Recent changes have made it easier for lower-tier subcontractors to claim against these bonds, sometimes without needing to file a lien first.
If a bond exists on your project, it is always worth looking into this option, especially where subcontractors do not get paid through the usual chain.
The Legal Remedies When a Subcontractor Does Not Get Paid
When subcontractors do not get paid, it can put serious pressure on their business. The good news is that under the updated Construction Act, they now have more options than ever to recover what they are owed, often faster and more effectively than relying on a lien alone. The key is to act quickly and choose the right approach based on your situation.
If you are a subcontractor dealing with a situation where you did not get paid, the construction lawyers at Gionet Fairley Wood LLP can help you understand your rights and help you take the next steps. Whether it is adjudication, a trust claim, or a lien, getting the right advice early can make all the difference in recovering your money.
Gionet Fairley Wood LLP is a litigation law firm serving Barrie, Simcoe County, Muskoka, and surrounding areas, with extensive experience in construction disputes and subcontractor payment claims. If you are a subcontractor, the experienced construction lawyers at Gionet Fairley Wood LLP can advocate for you. Contact 705-468-1088 or reach out through our website and let us find the perfect legal solution.
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.