2026 Amendments to the Construction Act

Effective January 1, 2026, significant amendments to the Construction Act, R.S.O. 1990 c. C.30 (the “Act”) are now in effect. The key changes are highlighted below.

The Prompt Payment Rules Will be Triggered More Easily

Under the previous version of the legislation, the Prompt Payment rules were triggered by the Contractor’s delivery of a “Proper Invoice” that meets the criteria set out in the legislation. Where the Contractor failed to deliver a “Proper Invoice”, the Prompt Payment rules did not apply.

As of January 1, 2026, any invoice delivered by a Contractor is deemed to be a “Proper Invoice”, unless the Owner notifies the Contractor within seven days of receiving the invoice that it is not a Proper Invoice in accordance with the Act. This will give the Contractor an opportunity to revise its invoice to bring it into conformance with the requirements.

This change will effectively bring all projects within the Prompt Payment regime, so both Owners and Contractors will need to ensure that their teams are familiar with their downstream payment and notice obligations. Failure to provide a notice of non-payment could result in both Owners and Contractors being required to pay an invoice even if the invoice is not payable or there are valid setoffs.

Annual Release of Holdback

January 1, 2026, brought with it a mandatory annual release of holdback. Under the amended legislation, on each anniversary of the contract date, Owners will be required to publish a notice of annual release of holdback, specifying the amount of the holdback that the Owner intends to release.

The annual release of holdback will apply immediately to all contracts entered into on or after January 1, 2026. For contracts pre-dating January 1, 2026, the annual release of holdback will come into effect on the second anniversary of the date of the contract following January 1, 2026. In effect, the industry has a one-year grace period on existing contracts before the annual release of holdback applies.

The process for the annual release of holdback will be as follows:

1. Holdback Notice: Owners will be required to publish a notice of release of holdback within 14 days of each anniversary of the Contract date. The notice will specify the amount of the holdback and the date the Owner intends to release it.
2. Holdback Payment Window: Provided that title is clear, beginning 60 days after the Owner’s publication of the Holdback Notice, the Owner will have 14 days to release the holdback to the Contractor.
3. Downstream Release of Holdback: Any party who receives an annual release of holdback will be required to release holdback downstream within 14 days of receipt of their payment.
   

Updates to the Adjudication Regime

The January 1, 2026 amendments bring a number of changes to the adjudication regime, including:

1. Private Adjudicators: As of January 1, parties to an adjudication may appoint an adjudicator who is not listed in the ODACC registry.
   
2. Expiration of Adjudication Period: Under the 2019 version of the legislation, a notice of adjudication could not be delivered “after the completion of the contract or subcontract” unless the parties agreed otherwise. A s of January 1, 2026, the adjudication expiry period is revised as follows:
   1. For a Contract: The adjudication period expires 90 days after the date on which the contract is completed, abandoned or terminated, unless the parties agree otherwise;
   2. For a Subcontract: The adjudication period expires 90 days after the earliest of:
      1. the date that the Contract is completed, abandoned or terminated,
      2. the date on which the subcontract is certified to be completed, and
      3. the date on which the subcontractor last supplies services or materials to the improvement.
3. Public Availability of Determinations: As of January 1, 2026, the Authorized Nominating Authority will be required to make adjudication determinations publicly available, subject to the removal of identifying information.

Deadline to Publish Notice of Termination of a Contract

The 2018 amendments to the Act introduced a requirement to publish a notice of termination of a Contract whenever a Contract is terminated. The January 1, 2026 amendments have introduced a requirement that this notice be published within seven days of the date that the Contract is terminated.

Holdback Included in the Owner’s Trust

As of January 1, 2026, the trust provisions of the Act are updated to provide that amounts retained as holdback form part of the Owner’s trust.

For more information about the latest amendments to the Construction Act, or any other construction-related matters, please contact a member of the firm’s Construction Law Group.