Contractual Holdbacks Are Not A Means Of Financing Projects

For construction projects in Quebec, contractual holdbacks help shield project owners from claims by subcontractors and other parties entitled to register a legal hypothec on the building. Used properly, it ensures that all parties are paid before the funds are fully released.

However, withholding must not become a means of financing a project at the general contractor’s expense. In Immobilier Multi-Locatif Québec inc. c. Constructions Béland et Lapointe inc., 2026 QCCA 218, the Court of Appeal upheld the order against a project owner that abused its right of withhol to force the contractor to bankroll the project.

• This decision drives home two key points: contractual withholding must be in good faith and in keeping with its legal objective;