Incoming Changes to Ontario’s Construction Act: What Bill 216 Means for You
Bill 216 aims to speed up payments and streamline dispute resolution in Ontario’s construction industry. However, it will also shift responsibilities and risk among all parties to a project. For the first time, owners and lenders must prepare for annual holdback releases, while contractors need to stay on top of invoicing, notices, and dispute timelines.
These amendments to the Act introduce significant changes focused primarily on three areas: holdback, adjudication, and administration. Once in force, the statutory regime will shift in four key ways:
- Holdbacks: The phased release of holdback is replaced with a mandatory annual release. It further repeals the owner’s statutory right to withhold holdback payments.
- Lien Expiry: A new 60-day lien expiry period triggered by the publication of the Notice of Annual Release of Holdback is established.
- Adjudication: The scope of adjudication under the Act has been significantly expanded beyond payment-related issues to cover a broader range of disputes, while also providing for the use of private adjudicators and extended timelines to bring a claim before an adjudicator.
- “Proper Invoices”: The process for disputing a proper invoice has been revamped, and will require owners to make timely notice of invoicing deficiencies.
Changes to the Holdback Regime: Mandatory Annual Release
Bill 216 introduces a mandatory annual release of holdback for construction contracts in Ontario. Project owners will be required to publish a Notice of Annual Release of Holdback within 14 days of the anniversary of the date that each contract was entered into. This notice must specify the amount of holdback to be paid and the intended payment date. Within the same 14-day window, owners will be required to release all accrued holdback for services or materials performed in the previous year, unless a lien has been preserved or perfected. Liens for services or materials covered by the notice will expire 60 days after its publication (discussed below). Once a lien expires or is discharged, the owner is required to release any holdback previously withheld.
This new holdback obligation flows down the construction pyramid, meaning that contractors and subcontractors must release corresponding holdback payments within subsequent 14-day timelines. Additionally, Bill 216 eliminates an owner’s previously-held right to withhold holdback by issuing a Notice of Non-Payment of Holdback. As the phased holdback release regime ends, withholding for set-off claims, back charges, or liquidated damages are no longer permitted. These amended holdback provisions should improve cash-flow down the construction pyramid, but owners and financiers must plan earlier for cash calls and rethink back-charge practices.
When do I need to act? If a procurement process for an improvement was commenced, or a contract for the improvement was entered into, after July 1, 2018, then the new mandatory annual release of holdback will apply. For contracts entered into before July 1, 2018, there are transition provisions which will dictate when the new mandatory annual release will apply. Contact us to review your contract and verify when the new regime applies to you.
Changes to Expiry of Liens
Bill 216 significantly restructures the lien expiry provisions in the Act. While the standard 60-day preservation period remains, the legislation introduces a new expiry trigger tied to the annual release of holdback. This is a new deadline that contractors need to be mindful of. When an owner publishes a Notice of Annual Release of Holdback, any liens related to services or materials covered by that notice will expire 60 days after publication. This mechanism only applies to work completed up to the date the notice is published; work performed after that date continues to follow the traditional lien expiry rules under section 31 of the Act, namely, substantial performance, date of last supply, or contract termination. As a result, longer projects will now face several lien expiry deadlines throughout the year.
Another notable aspect of Bill 216 is how it proposes to affect lien deadlines during adjudication. Under the current provisions, if you have submitted a dispute for adjudication, your lien deadline could be paused or tolled. Under the new rules, that pause no longer applies – lien deadlines run independently and must be tracked separately. Although parties can still initiate adjudication within 90 days of completion or termination, doing so no longer affects the statutory deadlines for preserving or perfecting liens.
When do I need to act? The amended lien expiry provisions will not take effect until the amendments become law. For contracts entered into before that date, there are transition provisions which will dictate when the new mandatory annual release will apply. Contact us to review your contract and verify when the new regime applies to you.
Changes to the Statutory Adjudication Regime
Bill 216 significantly expands access to adjudication. The new amendments provide that parties to a prime contract can now initiate adjudication up to 90 days after a contract is completed, abandoned, or terminated. For parties to subcontracts, the threshold will be 90 days after certification or last supply, whichever comes first. This will effectively close a gap in the Construction Act’s scheme stemming from end-of-project disputes, and extend the deadline for adjudication beyond the 60-day lien preservation period.
Bill 216 will also bring an end to the old, closed list of adjudicable issues in the Act. Instead of limiting the matters which can be referred to adjudication to payment-related disputes, the proposed amendments will allow adjudication of any prescribed matter to be enumerated in future regulations. In addition to the list of issues currently eligible for adjudication under the Act, the most recent draft regulations add disputes pertaining to:
• The scope of work required to be performed under the contract;
• A request for a change in the contract price; and
• A request for an extension of time in the completion of work required to be performed under the contract
The amendments to the Act also explicitly preserve a right to adjudication for any other matter agreed to by both the parties. Furthermore, any party (not just the contractor) will now be able to seek consolidation of related adjudications, even across different contracts for the same improvement, subject to the adjudicator’s control.
When do I need to act? This new adjudication scheme will come into force immediately upon the proclamation of Bill 216. Once in force, it will apply to all improvements where the contract was entered into or the procurement process commenced on or after October 1, 2019.Changes to Prompt Payment – What Makes for a “Proper Invoice”
Bill 216 changes how “proper invoices” are treated under the Act. A proper invoice triggers the prompt payment requirement, that is, the owner must pay the amount payable within 28 days. To constitute a proper invoice, a contractor must include certain prescribed information in their invoices (e.g. name, address, amount payable, payee contact information, etc.). This may be tedious, but it’s essential.
Bill 216 overhauls the definition of proper invoice in one important way: even if an invoice fails to include a prescribed piece of information, it will be deemed a proper invoice unless the owner notifies of the specific deficiency within 7 days of receipt. Under this new regime, an owner is entitled to request only the prescribed information, as well as any information reasonably necessary for “the proper functioning of the owner’s accounts payable system.” This shift places more administrative responsibility on owners and upstream parties, requiring them to act quickly to raise any concerns regarding “proper” invoicing – or risk losing that argument entirely.
When Do I Need to Act?
On August 25, 2025, the Ministry of the Attorney General released for comment a new set of regulations to the Act, together with a Consultation Paper on the Ontario Regulatory Registry. These comments are due by September 24, 2025. We still do not know when the bill will be “proclaimed,” or brought into force, this step indicates that the changes are impending.
How We Can Help
As experts in the field of Construction Law, RAR Litigation is especially suited to help you navigate all of these incoming changes. Whether you’re an owner, construction manager, or contractor, our team of skilled lawyers will be able to draw on their comprehensive knowledge of the Construction Act to tailor a legal strategy to your particular case that protects your interests, achieves your goals, and leverages your position.
Contact us to discuss how RAR Litigation can support you and your business.