Ontario Construction Act Jan 1 2026 — mandatory annual release of accrued 10% holdback for contracts > 1 year
Claim: Effective January 1, 2026, annual release of accrued holdback is mandatory for contracts longer than one year (previously optional). Mechanics:
- Owners must publish a Notice of Annual Release within 14 days after each contract anniversary
- Owners must pay accrued holdback no earlier than 60 and no later than 74 days after publication, provided no lien is preserved
- The basic 10% holdback continues to apply to every payment in the construction chain
Source: O'Connor MacLeod Hanna LLP (2026), "2026 Changes to Holdback — Amendments to the Construction Act." https://www.omh.ca/news-and-insights/publication/2026-changes-to-holdback---amendments-to-the-construction-act. Robins Appleby LLP (2026).
Confidence: Verified.
For Candid: Even with mandatory annual release, a GC carrying $1M of WIP at any given time is structurally short of cash relative to billings — 10% locked for up to a year, 28-day owner cycle, 7-day sub payment. The mismatch between when costs are incurred and when revenue lands is the structural source of the short time horizon that defeats long-payback investment. The 2026 amendments narrow but do not eliminate this gap.
Related
- reference Research brief: risk aversion, loss aversion, and post-failure decision patterns in GC and trades-business decision-makers (May 2026)
- reference Ontario Construction Act prompt-payment regime — Oct 1, 2019; Bills 216 and 60 amendments effective Jan 1, 2026
- reference Ontario Construction Act Jan 1 2026 — new 7-day "proper invoice" deeming rule; 28-day owner-to-contractor clock runs from deemed receipt