The Ontario Construction Act, SO 2017 c.10 Schedule 1, is the statute that governs construction contracts, prompt payment, statutory holdback, and lien rights for construction projects in Ontario. The name was changed from the Construction Lien Act in the 2017 amendments, with the lien and trust provisions effective July 1, 2018 and the prompt-payment and adjudication provisions effective October 1, 2019. Further amendments come into force January 1, 2026, including the annual-release holdback rule and changes to deficiency-notice timing. The Act applies to virtually all construction work on real property in Ontario: residential, commercial, industrial, and public-sector. Sections most-cited by contractors include s.6.1 (proper invoice), s.6.4 (notice of non-payment), s.22 (statutory holdback at 10 percent), s.31 (60-day lien preservation), and s.36 (90-day perfection).
Why it matters to Canadian contractors
- It is the legal framework that makes the 28-day payment clock, holdback, and lien rights possible. Every Ontario construction contract is governed by it whether or not the parties reference it.
- Contractors using US-built invoice templates or pre-2018 forms are not invoicing under the current Act. Their invoices likely do not qualify as proper invoices and the payment clock never starts.
- The Act has been amended substantially since 2017 and again for 2026. Outdated advice from before 2018 may reference repealed sections.
- Public-sector projects in Ontario are also governed by the Act (with some procurement-specific overlays). The same rules apply to municipal, school board, and hospital work.
Common mistakes and pitfalls
- Section numbers changed in the 2017 amendments. References to s.5 or s.46 of the old Construction Lien Act do not map cleanly onto the renamed sections.
- The Act does not apply to oil and gas well construction in Ontario (s.5(1)(b)). That work falls under the Surface Rights Act and other regimes.
- Federal projects (military bases, federal courts, etc.) are not covered by the provincial Act because of constitutional jurisdiction. Federal works are governed by the Federal Prompt Payment for Construction Work Act, in force December 9, 2023.
- Industrial projects with multi-prime structures can have complex contracting chains where the Act's trust and lien provisions interact in ways most contractors do not anticipate.
- Many contract documents in use today were drafted under the old Construction Lien Act and reference repealed provisions. Have your standard forms reviewed against the current Act.
Related
- Ontario Construction Act prompt payment guide→
- 2026 amendments to the Construction Act→
- Glossary: Proper invoice→
- Glossary: Builders lien→
This glossary entry is for general information only and does not constitute legal or tax advice. Canadian tax and construction law rules vary by province and contract. For advice specific to your situation, consult a licensed professional.