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ARTICLE · 12 SEPTEMBER 2014

Holdback Can Be Released Early? Understanding Early Holdback Release Under Ontario's Construction Lien Act

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With the growing complexity and duration of infrastructure projects, construction lawyers increasingly receive questions about facilitating "early holdback release".

CanadaReal Estate and Construction
Howard Krupat
Howard Krupat
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With the growing complexity and duration of infrastructure projects, construction lawyers increasingly receive questions about facilitating "early holdback release". Due to its previous infrequent use, early holdback release is a concept that is not always well understood.  This Davis LLP Construction Law Blog entry considers the availability of this payment mechanism in the context of Ontario's Construction Lien Act (the "Act").

Holdback – The Basics

The essential characteristics of the basic holdback fund prescribed by the Act are well known.  As work progresses, each payer under a contract or subcontract is required to retain ten percent of the price of the services or materials supplied as a statutory holdback fund, which provides a form of security for eligible contractors, subcontractors and suppliers.  This holdback fund must then be maintained until after the expiry of all applicable construction lien deadlines.

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