Changes to the Construction Act Receives Royal Assent

November 6, 2024
Amendments are based on recommendations from an independent review of the Act and address three major areas: holdback, adjudication, and administration.
The Changes appear to aim to reduce administrative burdens, encourage timely payments, and improve dispute resolution. While most amendments are not yet in force, they will apply to all construction projects in Ontario, including those with contracts signed before the amendments take effect. Transition rules and regulations will further define their implementation.

Key Amendments:

Mandatory Annual Release of Holdback:

• Owners must release accrued holdback annually, regardless of contract size, removing the previous $10 million threshold.

• Owners must publish a notice within 14 days of a contract’s anniversary date and release holdback within 14 days of the lien period expiry.

• New lien expiry rules tie lien rights to services/materials supplied before or after an annual notice, with a 60-day lien expiry for services covered by the notice.

• The amendments eliminate phased holdback release and prevent owners from withholding holdback for set-off claims.

Broadened Access to Adjudication:

• Adjudication is now allowed post-completion or termination of a contract and covers any prescribed or mutually agreed matters, beyond just payment issues.

• Parties can consolidate adjudications across multiple contracts on the same improvement, helping reduce contradictory findings.

• Adjudication can commence within 90 days of contract completion, exceeding the lien preservation period, and private adjudicators can be retained.

Deemed Lien for Design Services Without Improvement Commencement:

• Design service providers gain lien rights if an owner retains a holdback for their work, even if the improvement does not proceed, unless the owner proves no enhancement in land value.

Proper Invoices and Definition of "Price":

• Proper invoices are deemed valid unless owners notify contractors of deficiencies within 7 days of receipt.

• Regulations may now define "price" beyond market value in contracts lacking a stipulated price, accommodating diverse delivery models.

Source: Todd Storms of Soloway Wright Lawyers