What the January 2026 Construction Act Amendments Mean for Your Payment Workflow

On January 1, 2026, Ontario's Construction Act (R.S.O. 1990, c. C.30) received its most significant set of amendments since prompt payment and adjudication arrived in 2019. The changes came in two waves: Bill 216 (the Building Ontario for You Act) laid the groundwork, and Bill 60 (the Fighting Delays, Building Faster Act, 2025) refined the details. Together with the supporting regulations in O. Reg. 266/25, these amendments reshape how holdback flows, how invoices are validated, how disputes get resolved, and how statutory notices reach the industry.

If you run payment operations for a mid-size ICI contractor, five changes deserve your immediate attention. Each one alters a deadline, a document, or a default behaviour that your current workflow probably assumes is static.

1. Mandatory Annual Holdback Release (Section 26)

This is the headline change. Before January 2026, annual holdback release was optional and only available on contracts exceeding $10 million. Now it is mandatory for every contract longer than one year, regardless of value. The $10 million threshold is gone.

Here is how it works. Within 14 days after each contract anniversary, the owner must publish a Notice of Annual Release of Holdback using the new Form 6. That notice goes on a designated construction trade news website (more on digital notices below). After publication, a 60-day lien preservation window opens. If no lien is preserved or perfected during that window, the owner releases the accrued holdback between day 60 and day 74. Contractors then release holdback to their subcontractors within 14 days of receiving the owner's payment. Subcontractors pass it down the chain within another 14 days.

The old mechanism that allowed owners to refuse annual release by issuing a notice of non-payment under Section 27.1 has been fully repealed. As Fasken's construction group noted in their January 2026 advisory, this repeal removes the most common escape hatch that owners relied on to delay holdback flow.

Transition Rules

The transition rules matter if you have active contracts that predate January 1, 2026. For contracts signed on or after that date, the annual release cycle starts on the first anniversary. Simple enough.

For contracts signed before January 1, 2026, the mandatory annual release starts on the second anniversary of the contract date that falls after January 1, 2026. So if you signed a contract on June 1, 2025, the first anniversary after the effective date is June 1, 2026, and the second is June 1, 2027. That June 2027 date is when the first mandatory annual release triggers. The holdback accumulated from contract start through June 2027 all becomes subject to release at that point.

One exemption to flag: P3 (public-private partnership) agreements entered before January 1, 2026 are exempt from the mandatory annual release provisions entirely.

2. Proper Invoice Deemed Compliant (Sections 6.1 and 6.2)

The amendments add a new safeguard for contractors submitting proper invoices. If the owner does not notify the contractor in writing of deficiencies within 7 days of receiving the invoice, that invoice is automatically deemed a proper invoice. Once deemed proper, the 28-day payment clock starts running as though the invoice was perfect from the start.

This is a meaningful shift. Under the previous framework, owners could sit on an invoice for weeks and then reject it on a technicality, resetting the payment timeline. That delay tactic no longer works. The Ontario Bar Association's construction law section described this as one of the amendments most likely to reduce payment cycle times for subcontractors in the ICI sector.

There is a new obligation on the contractor side as well. Section 6.2 now requires that a proper invoice include “any other information necessary for the proper functioning of the owner's accounts payable system that the owner reasonably requests.” This means owners can specify additional fields (purchase order numbers, cost codes, project identifiers) and contractors must include them. The key qualifier is “reasonably.” An owner cannot demand information that has no legitimate accounts payable purpose.

3. Holdback Is Now Explicitly a Trust Fund

The Part II trust provisions of the Act have been clarified to state that holdback amounts constitute a trust fund. This was arguably implied before, but the 2026 amendments make it explicit. The practical consequence: commingling holdback with general operating funds is now unambiguously a trust violation.

McMillan LLP's construction team highlighted in their analysis that this clarification exposes directors and officers to personal liability if trust funds are mishandled. If your company holds holdback in its general operating account and that account goes into overdraft or is used to cover non-project expenses, you may have a trust breach on your hands.

For GCs and subcontractors who hold holdback on behalf of parties below them, the message is straightforward: segregate holdback funds. Maintain a separate trust account or, at minimum, maintain clear accounting records that identify holdback amounts at all times. Glaholt LLP's commentary on the amendments reinforced that the trust obligation applies at every tier of the construction pyramid, not just at the owner level.

4. Expanded Adjudication Scope (Part II.1)

Adjudication under the Construction Act has been available since October 2019, but its scope was limited. The 2026 amendments expand the types of disputes that can be adjudicated. You can now bring the following to adjudication:

• Change order disputes (valuation, entitlement, and scope)
• Scope of work disputes between contracting parties
• Holdback payment disputes arising under the new annual release provisions in Section 26

Norton Rose Fulbright's construction practice noted that bringing change order disputes into adjudication addresses one of the most common sources of payment delay on ICI projects. Previously, a disputed change order could stall for months or years in litigation. Now, either party can initiate an adjudication and get a binding interim determination, typically within the statutory timeframe.

Another significant change: parties can now appoint private adjudicators, provided the adjudicator is qualified through ODACC (the Ontario Dispute Adjudication for Construction Contracts authority). This opens the door to selecting adjudicators with specific subject matter expertise. The negotiated fee must be at least $1,000.

DLA Piper's Toronto office flagged an important nuance. While private appointment gives parties more control over adjudicator selection, both parties must agree. If they cannot agree, ODACC appoints the adjudicator through its standard process.

5. Statutory Notices Go Digital

The Act previously required certain notices to be published in a “construction trade newspaper.” The 2026 amendments replace that term with “construction trade news website.” Three platforms are designated under O. Reg. 266/25:

1. Daily Commercial News
2. Link2Build
3. Ontario Construction News

This applies to all statutory notices under the Act, including the new Form 6 for annual holdback release, notices of non-payment, and lien-related publications. BLG's construction and infrastructure group observed that this change simply formalizes what was already industry practice, since the designated print publications had long since moved to primarily digital distribution.

The practical benefit is speed and verifiability. Digital publication creates a timestamped record that is easier to prove in a dispute than a print newspaper clipping. It also reduces the turnaround time for getting a notice published.

What This Means for Mid-Size ICI Contractors

If you are a GC or major subcontractor running five to thirty active ICI projects in Ontario, these amendments change your day-to-day operations in concrete ways.

Your holdback tracking just got more complex. Every contract over one year now has a mandatory annual release cycle with hard deadlines. You need to track contract anniversaries, monitor Form 6 publication dates, watch 60-day lien windows, and distribute holdback within 14 days of receipt. Multiply that across your active project portfolio and you have a significant administrative load.

Your invoice process needs tightening. The 7-day deemed-proper rule benefits you as a payee, but Section 6.2's “reasonable request” provision means your invoices must be more complete upfront. Sloppy invoices that omit an owner's required fields will still be rejected (within those 7 days), and you lose time.

Your trust accounting needs a review. If you are holding holdback for subcontractors below you, confirm with your accountant that those funds are properly segregated and tracked. The personal liability exposure for directors and officers is real.

Your dispute resolution toolkit is bigger. Change orders and scope disputes can now go to adjudication. If you have been sitting on a stalled change order negotiation, adjudication may be a faster path to resolution than litigation.

Your notice procedures are simpler. Digital publication on designated platforms is cleaner and faster than the old newspaper requirement. Update your standard operating procedures accordingly.

The common thread across all five changes is that the Act now imposes tighter timelines with fewer escape valves. Owners cannot delay holdback release indefinitely. They cannot ignore invoices without consequence. Contractors cannot commingle trust funds without risk. The system demands more precision from everyone, and the contractors who build that precision into their payment workflows will be the ones who benefit most.