Ontario announces January 1, 2026, effective date for Construction Act changes

After much anticipation, Ontario has set January 1, 2026, as the date on which the Construction Act amendments will come into force with some modifications.

Our previous article summarized these changes, which were introduced on October 30, 2024, as part of the omnibus budget bill, Bill 216, Building Ontario For You Act (Budget Measures), 2024. Watch for a more in-depth Gowling WLG Building Brief article on the changes to holdback rules, adjudication procedures, prompt payment, and other areas. We will also be hosting a webinar on January 14, 2026. Please subscribe to our distribution list to stay up to date.

Below is a summary of the key amendments and implications.

1. Update to holdback requirements, lien rights will not expire annually

Effective January 1, 2026, section 26 of the Construction Act will mandate that owners release holdback funds annually. Previously, section 26.1 provided an option, but not a requirement, to release holdback on an annual or phased basis. Section 26.1 has now been removed. In its place, the amended section 26 requires that each year, after the contract anniversary, owners are required to give notice detailing the holdback amount to be paid and release it within a set timeframe if no liens are registered. Holdback will be required to be paid at least 60 days, but not later than 74 days, after the date on which the notice of annual release of holdback is published.^[1] The Forms Regulation will be amended to include a form for a Notice of Annual Release of Holdback.^[2]

Additionally, section 27.1(1) under the previous version of the Construction Act, which provided that owners may refuse to pay holdback in specified circumstances, will be removed effective January 1, 2026. Note as well that section 30 of the Construction Act, dealing with set-off against holdback, has changed through the recently passed Bill 60, Fighting Delays, Building Faster Act, 2025: it will now provide that the set-off against holdback set forth in that section will apply where a contract or subcontract is abandoned or terminated.^[3]

Note: While Bill 216 had originally proposed annual expiry of liens consistent with the annual release of holdback (by amending section 31(2) and 31(6) of the Construction Act), this was removed from the changes to the Construction Act by way of Bill 60.^[4] The changes to the Construction Act will not provide for annual expiry of liens arising from the supply of services or materials to an improvement that are included in an annual holdback notice.

While most amendments would take immediate effect for projects in the province on January 1, 2026,^[5] the holdback rules apply for the second anniversary of the day the contract was entered into that follows January 1, 2026, effectively providing a one-year transition period. Note as well that Bill 60 allows the Minister to prescribe certain project agreements for which the prior holdback provisions under the old section 26 may continue to apply, though as of the date of this writing no such regulations have been introduced.^[6] Payors and payees alike would be well advised to review project timelines and identify contract anniversary dates that will trigger holdback payment and notice obligations.

2. Streamlining invoicing and prompt payment processes

As of January 1, 2026, there will be a deeming provision that considers an invoice to be a "proper invoice" if the owner does not provide written notice, within seven days, of deficiencies in the invoice and what is required to address them.  

The definition of a "proper invoice" will also now include “any necessary information for the owner's accounts payable system that the owner reasonably requests.”

3. Changes to interim adjudication

January 1, 2026, will also see the amendments to Part II.1 taking effect, which expand the scope of, and introduce increased flexibility to, interim adjudication.

Under the amended Act, parties will be able to use private adjudicators, and are not limited to using adjudicators listed in the Ontario Dispute Adjudication for Construction Contracts (ODACC) adjudicator registry. Private adjudicators must still be qualified by ODACC; however, fees for private adjudicators are to be negotiated between parties. As of the date of this article, ODACC has not introduced any policies regarding private adjudicators.

The amended Act will permit regulations to prescribe further ranges of issues that can be adjudicated. A new Adjudications Under Part II.1 of the Act Regulation^[7] will also take effect on January 1, 2026, that will, among other things, expand the range of issues to include any of the following matters, if resolving that matter is reasonably necessary to make a determination on any other matter that may be adjudicated:

• The scope of work required to be performed under the contract;
• A request for a change in the contract price;
• A request for an extension of time in the completion of work required to be performed under the contract.

Additionally, adjudications may include disputes between principal and surety regarding payment under labour and material bonds, in certain circumstances.

The January 1, 2026, changes will also add two new sections to the Act allowing parties to object to an adjudicator’s jurisdiction or an adjudicator having exceeded their jurisdiction, and to request corrections to decisions to correct errors or “amend the determination to correct an injustice caused by an oversight on the adjudicator’s part” within five days of the decision.

The timing catchment of interim adjudication will also expand: disputes can be brought to adjudication within 90 days following the earlier of the contract’s completion or abandonment, or within 90 days after either a subcontract is certified as completed under section 33, or the subcontractor’s last supply of services or materials to the improvement.

4. Refining the definition of “price” to reduce disputes

To reduce disputes over contract value, the definition of “price” will change to permit regulations to specify a price other than market value where parties do not agree on a different price. To date, no regulations specifying a “price” have been introduced.

This addition may help reduce disputes over contract value, though parties will need to familiarize themselves with any pricing regulations if considering a contract without an agreed-upon price.

5. Simplifying document requirements for “written notice of a lien”

The changes taking effect January 1, 2026, will also provide that a copy of a claim for lien will satisfy the requirements of “written notice of” that lien. This change is another step towards minimizing technical requirements and making it easier for parties to enforce their lien rights.

6. Transitional provisions

While most of the amendments apply immediately on January 1, 2026, there are some exceptions for specific contract provisions, adjudication rules, or (as discussed above) previously accrued holdbacks on projects whose contracts were entered into before the amendments came into force. These specific provisions address how the new rules are to be applied where work on a project has already commenced.

7. Regulations

In addition to the changes to Regulations described above, January 1, 2026, will see additional changes to the Regulations under the Construction Act, including:

• Section 3 of the Procedures for Actions Under Part VIII Regulation^[8] will be amended to add that a party may join a lien claim and a claim for breach of trust under Part II of the Act;^[9]
• Section 1 of the General Regulation^[10] will be amended to define a “construction trade news website” (replacing “construction trade newspaper”) as any of The Daily Commercial News, Link2Build, or Ontario Construction News;^[11]

Conclusion

It will be important for professionals in the construction industry to understand these changes to Ontario’s Construction Act, and how they affect rights and obligations on all sides of construction projects. Consulting with a legal professional specializing in construction law can help parties know what these changes mean for them.

How Gowling WLG can help

Gowling WLG has been deeply immersed in the construction law reform process across the country. We have held several events and published many articles since the introduction of the amendments to provincial construction laws, and similar changes that are coming across the country.

We would be happy to meet with you or your organization to discuss your questions and concerns about the amendments to the Construction Act or any other provincial construction laws. If you have any questions, please contact any member of our Infrastructure and Construction Industry Group.