The 2026 Ontario Construction Act Changes: What Homeowners Need to Know
Ontario's Construction Act has undergone significant modernization over the past several years, with amendments phased in between 2018 and 2026. These changes fundamentally alter how renovation payments work, how disputes are resolved, and what protections homeowners and contractors have.
A Brief History of the Changes
The Construction Act (formerly the Construction Lien Act) was originally enacted in 1990. After decades of complaints from both sides of the industry, Ontario undertook a comprehensive review that resulted in major amendments:
| Year | Change | Impact |
|---|---|---|
| 2018 | Name changed to Construction Act | Broader scope beyond just liens |
| 2019 | Prompt payment provisions enacted | 28-day payment timelines |
| 2019 | Adjudication introduced | Fast-track dispute resolution |
| 2024 | Holdback rules modernized | Clearer timelines for residential projects |
| 2025 | Adjudication expanded to residential | Homeowners can now use adjudication |
| 2026 | Full prompt payment for residential | All residential projects covered |
The 10% Holdback: What Changed
The holdback has always existed, but the rules are now clearer:
How it works:
Example: $100,000 Renovation
| Event | Amount | Running Holdback |
|---|---|---|
| Milestone 1 paid ($20,000) | $18,000 released, $2,000 held | $2,000 |
| Milestone 2 paid ($25,000) | $22,500 released, $2,500 held | $4,500 |
| Milestone 3 paid ($25,000) | $22,500 released, $2,500 held | $7,000 |
| Milestone 4 paid ($30,000) | $27,000 released, $3,000 held | $10,000 |
| 60 days after completion | $10,000 released (if no liens) | $0 |
Prompt Payment: The 28-Day Rule
The prompt payment provisions establish clear timelines:
A "proper invoice" must include:
Adjudication: Fast-Track Disputes
One of the most significant changes: **adjudication** is now available for residential projects. This provides a faster alternative to court:
Common issues resolved through adjudication:
How These Changes Affect Your Renovation
For Homeowners
New obligations:
New protections:
For Contractors
New obligations:
New protections:
What This Means for Your Contract
Every renovation contract in Ontario should now address:
You can generate a contract that addresses all of these requirements using RenoNext's free [Contract Generator](/contracts). It automatically includes holdback calculations, prompt payment references, and dispute resolution mechanisms.
For more on how escrow protects your renovation funds, see our guide on [Why Renovation Escrow Protects Your Money](/blog/why-renovation-escrow-protects-your-money).
