How much holdback is required in Ontario?
Ontario's Construction Act requires a basic holdback of 10% of the value of the services or materials supplied under the contract. The owner must retain this holdback from each payment as security for potential lien claimants down the construction pyramid.
When can construction holdback be released?
The basic holdback may be released once the 60-day lien period following substantial performance (or completion/abandonment) has expired and no liens have been preserved. Owners often require a lien search before releasing holdback.
Is there a separate holdback for finishing work?
Yes. After substantial performance, a further holdback applies to the value of work still to be completed (finishing holdback). It is released after the lien period for completion runs, so holdback is released in stages rather than all at once.
Can holdback be released early with a surety bond?
Under the Construction Act, holdback can sometimes be addressed through a holdback bond or through annual or phased release on longer projects. The rules are technical; a surety or lawyer can confirm what applies to your contract.