Construction Act Section 27.1 Repeal

Construction Act Section 27.1 Repeal

Fast-Fact Summary

• Governing Agency: Ontario Ministry of the Attorney General / Construction Act framework
• Form, Bylaw, or Regulation: Construction Act, R.S.O. 1990, c. C.30 (Holdback refusal control)
• Effective/Current Anchor: Ontario Construction Act amendments in force January 1, 2026 through Bill 216 and Bill 60
• Direct Portal or Source: Ontario Legislation Portal (https://www.ontario.ca/laws/statute/90c30)

Mandatory Scope

This statutory compliance requirement applies to all construction contracts, owners, general contractors, subcontractors, and trades operating within the province of Ontario. There are no exemptions based on worker counts, project values, licence categories, or equipment classes in the governing legislation. Any payer administering holdbacks on an Ontario-based construction project must comply with the repeal of Section 27.1 and the updated payment administration rules.

Deadlines & Administrative Windows

• 7-Day Invoicing Rule: Invoices are legally deemed proper unless the owner delivers a formal written notice of deficiency to the payee within 7 days after receiving the invoice. Missing this 7-day notice window forfeits the payer's right to dispute the invoice form or structure and immediately triggers the 28-day prompt-payment timeline.
• Mandatory Annual Holdback: For construction contracts extending beyond one year, owners must publish a Notice of Annual Release of Holdback (Form 6) on an electronic construction trade news website within 14 days after each contract anniversary.
• Holdback Payment Window: Payment of the accrued basic holdback must occur no earlier than day 60 and no later than day 74 after the publication of Form 6, provided no liens have been preserved.
• Repeal of Section 27.1: Payers can no longer publish or deliver a notice of non-payment to refuse holdback distribution on the grounds of deficient or incomplete work. Holdback retention and usage are strictly restricted to formal contract abandonment, contract termination scenarios, or preserved lien risks.
• Adjudication Extension: Parties have a strict 90-day window after contract completion, abandonment, or termination to initiate interim binding adjudication through the Ontario Dispute Adjudication for Construction Contracts (ODACC) or a qualified private adjudicator.

Financial & Legal Liability

• Non-Compliance Penalty: Improper holdback refusal creates immediate payment and adjudication exposure. While specific statutory dollar-amount fines are not defined in the source data, non-compliance triggers prompt-payment interest penalties and exposes the payer to binding interim adjudication.
• Average WSIB Premium Rate: $1.23 per $100 of insurable payroll, down from $1.25 per $100 of insurable payroll.
• G6 Non-Residential Construction Rate: $1.61 per $100 of insurable payroll.
• 2026 Maximum Insurable Earnings Ceiling: $121,700.

Step-by-Step Filing Instructions

• Step 1 - Invoice Intake Evaluation: Upon receipt of a contractor's invoice, immediately review its structure. If any structural deficiencies exist, draft and deliver a formal written notice of deficiency within 7 days. If no notice is sent within 7 days, proceed to pay the invoice within the 28-day prompt-payment window.
• Step 2 - Track Contract Anniversary: For projects extending past 12 months, track the exact contract anniversary date to trigger the annual holdback release process.
• Step 3 - Publish Form 6: Within 14 days after the contract anniversary, publish the Notice of Annual Release of Holdback (Form 6) on an electronic construction trade news website.
• Step 4 - Monitor Lien Registry: Monitor the project registry for any preserved liens between day 1 and day 59 post-publication.
• Step 5 - Release Holdback: If no liens are preserved, release and pay the accrued basic holdback between day 60 and day 74 following publication. Do not attempt to withhold these funds for deficient or incomplete work, as the Section 27.1 non-payment mechanism is repealed.
• Step 6 - Initiate Adjudication if Disputed: If a holdback dispute arises due to contract abandonment or termination, file a dispute notice to initiate interim binding adjudication through ODACC within 90 days of contract completion, abandonment, or termination.

2026 Inspection Notes

For 2026 construction compliance context, pay close attention to working-at-heights training records, trenching and excavation controls, and training/competency documentation. Ensure all site personnel have active, verified training credentials readily available for field inspectors.

Official Sources

• https://www.ontario.ca/laws/statute/90c30
• https://www.ontario.ca/laws/regulation/180304