Hard deadlines, not goodwill, now govern payment on an Ontario construction project. A construction payment dispute therefore turns on dates more often than on the merits, and the rules changed substantially on January 1, 2026. Contractors, subcontractors and owners who rely on older advice are working from superseded law. This guide sets out what applies today and how quickly you have to move.
What Changed on January 1, 2026
The legislature amended the Construction Act twice before the changes ever took effect. Bill 216 passed in 2024, Bill 60 revised it in 2025, and the combined package came into force on January 1, 2026.
Most construction payment disputes now run on those amended rules. Older projects are the exception, and the transition points below explain when.
Three changes matter most. Holdback release became mandatory and annual. Adjudication reaches further, both in timing and in subject matter. And an invoice the owner does not challenge quickly now counts as a proper invoice.
Lien deadlines survived untouched, despite an early proposal to change them, so preservation and perfection still run on the familiar clocks.
Most search results on this topic still describe the old regime, which is a real hazard in any construction payment dispute today. If a source tells you an owner can withhold holdback by publishing a notice, or gives an adjudicator’s award ten days to pay, it describes superseded law.
Prompt Payment: The Clock That Starts Most Construction Payment Disputes
Payment obligations begin with a “proper invoice.” That is a written bill containing prescribed information, including the contractor’s name and address, the invoice date and the period of supply, the authority under which the work was done, a description and quantity, the amount payable and payment terms, milestone payments where the contract provides for them, and the person who should receive payment. The owner may also reasonably request further information its accounts payable system needs.
A contract cannot require certification or owner approval before an invoice counts as proper. Where the contract is silent, invoices go monthly.
A defective invoice is the most common own goal in a construction payment dispute, because the 28-day clock never starts.
The deemed proper invoice
Here is the most useful new rule for contractors. If the owner does not give written notice of what is deficient, and what would fix it, within seven days of receiving the invoice, the invoice counts as proper.
Owners who ignore invoices therefore start the clock against themselves. Silence is no longer a delay tactic, and that single change has already shortened a great many construction payment disputes.
The 28-day and 7-day cascade
The owner must pay the contractor within 28 days of receiving a proper invoice. If the owner disputes any part, it must deliver a notice of non-payment within 14 days, in the prescribed form, specifying the amount withheld and the reasons, and must still pay the undisputed balance.
The contractor then has seven days from receiving that money to pay its subcontractors, rateably where the owner paid only part. Each subcontractor has the same seven days to pay down the chain.
Where the owner does not pay, the contractor must give its own subcontractors a notice of non-payment within seven days of receiving the owner’s notice, or within 35 days of delivering the proper invoice if no owner’s notice ever arrives.
That notice must also include an undertaking to refer the matter to adjudication. Withholding without the undertaking is not lawful, and contractors miss this more often than they miss the deadline.
Cascading notices keep a construction payment dispute from stalling at the top of the chain.
Interest on late payment is mandatory, and no contract can waive it. It runs at the greater of the prejudgment rate under the Courts of Justice Act and the contractual rate.
Adjudication: The Fastest Route Through a Construction Payment Dispute
Adjudication is interim binding dispute resolution built into the Act. The Legislature designed it for exactly the construction payment dispute that would otherwise wait two years for a trial date.
It moves cash while the larger fight continues. An adjudicator can resolve a claim in as little as six weeks from notice to determination.
Section 13.15(1) sets out its effect:
The determination of a matter by an adjudicator is binding on the parties to the adjudication until a determination of the matter by a court, a determination of the matter by way of an arbitration conducted under the Arbitration Act, 1991, or a written agreement between the parties respecting the matter.
Timelines
A party starts by delivering a written notice of adjudication. The proposed adjudicator must consent within four days, failing which the nominating authority appoints one within seven days of a request.
The claimant then delivers its documents no later than five days after the adjudicator consents or the nominating authority appoints one. The adjudicator must decide within 30 days of receiving those documents, extendable only by written agreement.
The determination is payable within 15 days. That figure stood at ten days before January 1, 2026, which is why older summaries mislead.
Wider reach since 2026
Adjudication used to close off once the contract was complete. A party may now give notice up to 90 days after the contract ends, whether by completion, abandonment or termination, with a parallel rule for subcontracts.
That matters most to subcontractors, who often only discover a construction payment dispute after they have left the site.
The subject matter expanded too. Beyond valuation, payment, holdback and set-off, adjudication now reaches scope of work, change requests, extensions of time and bond disputes.
Enforcement and review
A party files a certified copy of the determination with the Superior Court, and it becomes enforceable as a court order. The Court of Appeal addressed the route for challenging that enforcement in MGW-Homes Design Inc. v. Pasqualino, 2024 ONCA 422.
Judicial review is the only avenue, it requires leave of the Divisional Court, and the grounds are narrow and statutory. The Divisional Court considered such an application in Pasqualino v. MGW-Homes Design Inc., 2022 ONSC 5632.
Critically, seeking judicial review does not suspend the obligation to pay. Payment follows the determination even while the losing party disputes it, which is the whole point of the construction regime.
An applicant who neither pays nor obtains a stay risks losing the application outright, so treat the 15-day deadline as real. Leave must also be sought within a short statutory window, which is another reason to take advice the same week.
Liens: Deadlines No Judge Can Extend
You must preserve a lien within 60 days and perfect it within 90. Those numbers survived the 2026 amendments untouched.
A lien gives leverage and security rather than ensuring speedy payment. It changes the economics of a construction payment dispute overnight, because it stops sales and construction draws.
For a contractor, the 60 days runs from the earliest of publication of the certificate of substantial performance and the completion, abandonment or termination of the contract. For everyone else in the chain, the clock also runs from last supply and from certification or declaration that the subcontract is complete.
The perfection trap
Perfection does not run from the day you registered. It runs from the last day on which you could have preserved the lien, so registering early buys no extra time. Perfecting means starting an action and registering a certificate of action on title.
Miss either deadline, and the lien expires. No judge has discretion to extend it, which is why experienced counsel preserve first and argue afterwards. It is still possible to sue for money owing without a lien, but it becomes an unsecured debt, with lower priority than a lien in the event of insolvency of the customer.
Two points on timing
A shrinking group of projects still sits on the old 45-day clock. It applies only where the prime contract was signed, or the procurement process began, before July 1, 2018, which now means long-running infrastructure work.
The transition turns on the date of the prime contract or procurement, not your subcontract, and a subcontractor often cannot tell which regime applies. On any long project, assume the shorter period.
Since January 2026, an owner or contractor who terminates must publish a notice of termination within seven days, and the publication date becomes the deemed termination date. That finally gives everyone down the chain a knowable start date.
Getting a lien off title
An owner does not have to litigate to close a sale or a draw. Section 44 lets any party vacate the lien by paying into court or posting a lien bond for the amount claimed, plus security for costs of the lesser of $250,000 or 25 per cent of the claim.
The lien then attaches to the security instead of the land. The construction payment dispute continues, but the project stops bleeding.
Holdback and Trust Claims
Basic holdback remains 10 per cent of the price of services and materials as supplied. Holdback fuels more construction payment disputes than any other single item, and release is no longer optional.
The owner must publish a notice of annual release within 14 days after each contract anniversary and pay the accrued holdback between 60 and 74 days after publication, unless a lien has been preserved or perfected and remains undischarged. Payment then flows down the chain within 14 days at each tier.
The 2026 amendments repealed the notice that once let an owner refuse to pay holdback for reasons of its own choosing. A preserved or perfected lien is now the only ground for withholding, and deficiency arguments belong in adjudication or set-off.
Timing differs for older contracts. Agreements signed on or after January 1, 2026 reach their first mandatory release at the first anniversary, while earlier contracts wait for the second anniversary falling after that date.
The trust that reaches personal assets
Section 8(1) creates the statutory trust, which allows persons lower down in the chain to assert that those above them hold money in trust for them:
All amounts, (a) owing to a contractor or subcontractor, whether or not due or payable; or (b) received by a contractor or subcontractor, on account of the contract or subcontract price of an improvement constitute a trust fund for the benefit of the subcontractors and other persons who have supplied services or materials to the improvement who are owed amounts by the contractor or subcontractor.
Section 13(1) then reaches individuals. It makes a director or officer, or a person with effective control, liable where that person “assents to, or acquiesces in, conduct that he or she knows or reasonably ought to know amounts to breach of trust by the corporation.”
Trusts survive bankruptcy
For years, insolvent payers argued that mixing trust money into a general account destroyed the trust. The Court of Appeal rejected that argument in The Guarantee Company of North America v. Royal Bank of Canada, 2019 ONCA 9. Commingling defeats certainty of subject matter only where it makes the trust property impossible to identify or trace.
The outcome is not automatic. A claimant must still make out the certainties on the facts, which turns on tracing and on the records the trustee kept.
Where it works, a trust claim outperforms a lien. It reaches personal assets, it can survive an insolvency, and since 2026 you can join it with the lien action in one proceeding.
In the right circumstances, a trust claim converts a construction payment dispute against an empty company into a claim against the people who ran it, provided you can show they assented to or acquiesced in the breach.
What to Do Next: When to Call a Lawyer
Sequence beats strategy in a construction payment dispute. Work the deadlines in order.
Issue a compliant proper invoice, because a defective one never starts the 28-day clock. Watch for a deficiency notice within seven days and a notice of non-payment within 14.
Then calendar the lien deadline immediately from the earliest trigger. That is the only deadline that cannot be repaired, and the last-supply date is the most litigated fact in lien practice.
Preserve the evidence. Daily reports, delivery slips, site photographs and the email trail around the last day on site decide more of these cases than the contract does.
Choose remedies knowing they stack rather than compete. Adjudication produces cash fastest. A lien produces leverage, because it stops sales and draws. A trust claim produces defendants who cannot hide behind a corporation.
If you are the owner, publish your holdback notices on time, publish a notice of termination within seven days of any termination, and stop treating holdback as a bargaining chip. The Construction Act text is the place to check any deadline before you rely on it.
Call a litigator the week the problem appears, not the month after. Whoever protected their deadlines usually wins the construction payment dispute, and by then the choice has already been made.
Ontario’s construction rules reward preparation and punish delay. If you are facing a construction payment dispute, or you have just received a lien or an adjudication notice, contact Cowan for a clear read on your deadlines and your options.
