The Ontario Construction Act gives the owner a 28-day clock to pay a proper invoice. If they want to withhold any of it, they must issue a notice of non-payment within 14 days of receiving the proper invoice. Miss that window and they lose the right to dispute the amount on the invoice. For contractors, that 14-day rule is one of the most powerful provisions in the Act, most owners do not know it exists.

This article covers what a notice of non-payment must contain, when it must be sent, the consequences if the owner does not send one, and how a contractor should respond when one is received.

What is a notice of non-payment?

A notice of non-payment is the owner’s formal statement that they intend to withhold all or part of an invoice. It is governed by section 6.4 of the Construction Act for owner-to-contractor relationships, and by section 6.5 for contractor-to-subcontractor relationships.

Two forms are prescribed by O.Reg 303/18:

  • Form 1.0.1, Notice of Non-Payment by Owner. Issued by the owner to the contractor.
  • Form 1.0.2, Notice of Non-Payment by Contractor. Issued by a contractor to a subcontractor when the owner has withheld payment.

Both forms require the same content: the date of the proper invoice, the amount being withheld, the reason for withholding each amount, and (for contractor-to-sub notices) the date the contractor received the owner’s upstream notice.

When the notice is due

The owner has 14 days from receipt of the proper invoice to issue the notice. Calendar days, not business days. The clock starts on the day of receipt, not the day of issuance.

For a contractor passing the notice down to a subcontractor under section 6.5, the contractor has 35 days from the date of the proper invoice they sent to the ownerto issue the downstream notice, or 7 days from receipt of the owner’s Form 1.0.1, whichever is later. The contractor must also commit to referring the dispute to adjudication on behalf of the subcontractor.

What the notice must contain

The Act is specific about content. A vague notice is not a valid notice. The form must include:

  1. The date the proper invoice was received.
  2. The full amount of the proper invoice.
  3. The specific amount being withheld (in dollars).
  4. The specific reason for withholding each amount being withheld. “Disputed” or “quality issues” without detail is not specific enough.
  5. The form must be signed and dated by the person issuing it on behalf of the owner.

Note the specificity requirement on point 4. Ontario courts have held that a notice claiming “poor workmanship” without specifying which work, which deficiency, and the value attributed to it is not a valid notice. The Act intentionally raises the bar so contractors can defend the specific items disputed and proceed with the rest.

What happens if the owner does not send one

Here is where the rule favours contractors. If the owner does not issue a valid notice of non-payment within 14 days, they are deemed to accept the invoice. They cannot later dispute the amount.

The owner must pay the full invoice by day 28, and if they do not, statutory interest begins accruing automatically from day 29. The contractor can also refer the dispute to ODACC for binding adjudication, where the adjudicator’s starting position is that no valid notice was issued and therefore there is no legitimate basis to withhold.

Owners and their lawyers know this, which is why a notice usually gets sent. But a surprising number of small-volume owners do not and contractors who watch the 14-day clock can use the missed deadline as leverage.

How to respond when you receive a notice

If you receive a Form 1.0.1 from the owner, the workflow is:

  1. Check it for validity. Is it within 14 days of your proper invoice? Are the withheld amounts specific? Are the reasons specific? An invalid notice is not a notice.
  2. Pass it down if applicable. If you have subcontractors waiting on the same payment, issue Form 1.0.2 within the 35-day or 7-day window described above. You must also commit to referring the dispute to adjudication.
  3. Decide whether to dispute. If you disagree with the withheld amount, you can refer the dispute to ODACC adjudication. ODACC will issue an interim-binding determination within roughly 30 days. For claims under $50,000 there is no referral fee; for claims at or above $50,000 the certification fee is $120 + HST and the referral fee is $600 + HST.
  4. Document everything. Save the date the notice was received, the form itself, your downstream notice if any, and your response. If the matter eventually goes to court or adjudication, paper trail wins.

Quick checklist before you send an invoice

A contractor’s best defence against missed notices is to send invoices that clearly start the 28-day clock and to track when each owner responds. Three items to confirm before every invoice:

  • The invoice qualifies as a proper invoice under section 6.1 (period of work, contract reference, full identification of payment recipient). See the proper invoice guide for the field list.
  • Date of delivery is documented (email, courier tracking, signed handover). This is the date that starts the 14-day notice clock.
  • You have a calendar reminder set for day 14 (notice deadline) and day 28 (payment deadline). Markup tracks both automatically.

This article is general information for Ontario trades contractors, not legal advice. Notice rules have specific procedural requirements and ODACC has its own forms and timelines. Before responding to a notice or referring a dispute to adjudication, consult a construction lawyer licensed in Ontario. Markup is a software platform, not a law firm.