Owners May Release Lien Holdbacks

Ontario’s construction owners, contractors and sub-contractors received welcome news from the Ontario government on April 9, 2020, when it announced it will restore procedural time periods under the Construction Act effective April 16, 2020.

What does this mean for owners?

This means that owners will once again be able to release holdback payments to contractors as they normally would have done. The change will resolve a potentially significant cash flow problem for the construction industry. The March 16 emergency order O. Reg. 73/20 suspended all statutory time limits and procedural time periods, including those setting the expiry date for lien rights. With no limit on when lien claims could be made, owners had to keep the lien holdback indefinitely. Exempting the Construction Act from O. Reg. 73/20 will restore certainty for owners, defining when lien rights expire. This in turn allows owners to pay the lien holdbacks at a known date.

What about holdbacks between March 16 and April 16?

The suspension will be lifted on April 16, 2020, giving owners time to prepare. Once lifted, contractors and sub-contractors will have the same amount of time to meet a deadline that had been remaining before the suspension began on March 16, 2020.

For further information, owners should refer to the amendments to O. Reg. 73/20 on e-Laws. Please note that at the time of this posting, e-Laws was not yet updated to reflect the amendments.

Read more about the amendment and initial emergency order