Liens, holdback and security for a delay claim in Ontario

A delay claim in Ontario is really two claims wearing one number. One part of it is the price of supply that went on for longer than it should have. The crane that stayed on site, the crew that did extra work because the owner defaulted. The other part is damages: absorbed head-office overhead, the job you could not take, the profit you did not make. The first part is security. The second part is litigation.

Everything else on this page follows from that split: how to build the lien schedule, what happens to the balance, and how the 2026 amendments to the Construction Act changed the money around a live delay dispute without touching the lien clocks at all. The wider Ontario picture is on the Ontario extension-of-time hub. The pan-Canadian backdrop is on the Canada extension-of-time hub.

Does an Ontario lien secure a delay claim?

Partly. Under the Ontario Construction Act, s 14(1) confers a lien for the price of services or materials supplied to an improvement, and Ontario courts apply a functional nexus test. The services or materials must contribute directly to the improvement, not merely be geographically present on it. Delay cost is therefore lienable to the extent it is the price of extended supply, and unlienable to the extent it is damages.

That is more permissive than most practitioners assume. The governing formulation is that prolongation costs are lienable where they "can be equated to compensation for the supply of services or materials" and add value to the improvement itself, but that "a lien does not lie to recover damages suffered as a result of a tort".

Jurisdictional layer, Ontario only. Every authority in this table is first instance (Superior Court or General Division) except the 1974 Court of Appeal affirmance in Marentette Bros: no post-2018 Ontario appellate authority on the lienability of delay or prolongation costs exists, which is a real doctrinal thinness. The rows rest on secondary sources. No judgment and no consolidated statutory text was read in original form.

Note what the Selectra line does and does not decide. Overhead is excluded because of its relationship to the improvement, not because it is a delay cost, and the corpus records a fixed-price and cost-plus distinction behind the result, on the footing that a fixed price already incorporates overhead. Note too what Structform and Marentette Bros let through: extended equipment and extra labour add no value to the finished building at all, and are lienable anyway, because Ontario's test is price of supply rather than value added.

How to characterise the heads of delay cost, and what happens to the unlienable balance

Build the lien schedule from the price-of-extended-supply heads and leave the damages heads out of the lien amount entirely. In practice that means pricing the equipment and labour that were actually supplied during the extended period as a supply, at contract or reasonable rates, with the site records to prove they were on the improvement, and pleading absorbed overhead, lost opportunity and general breach damages in the action instead.

Three drafting consequences follow.

Characterise the head, not the delay. "Prolongation costs, 137 days" is a damages pleading dressed as a lien. A schedule that reads tower crane, 137 days at the contract standby rate, hoist operator, 137 days, site labour on the owner-directed resequencing, 1,840 hours is a claim for the price of supply, and each line answers the functional-nexus question on its own. Where the cost is genuinely mixed (a site supervisor who both supervised extended supply and absorbed head-office function) split it, and be able to say how.

The discipline is statutory, and it has teeth. Section 35 of the Construction Act creates liability in damages where a person preserves a lien knowing, or where they ought to know, that the amount is wilfully exaggerated or that they are not entitled to a lien, with ss 47 and 86 supplying the reduction, vacating and costs machinery. See also RJ Concrete v Eco Depot Ltd 2022 ONSC 1759 on lien reduction. A contractor that dumps its entire delay-damages number into the lien amount is exposed under s 35. Lien the price component. Pursue the damages component in the action.

The unlienable balance is not lost: it changes forum, not existence. Overhead, lost opportunity and general breach damages remain a contract claim, enforceable in the ordinary way and subject to the ordinary limitation analysis. A lien is security for a debt. Excluding a head from the lien decides only whether that head is secured against the premises. The general Canadian treatment of those heads is on the neutral prolongation and delay costs page.

There is a forum trap attached to that last point. In Castle Homes Design Inc v McKenzie 2026 ONCA 98 the Court of Appeal recorded that conflicting authorities have "created genuine uncertainty over whether the appeal route" from a lien action lies to the Court of Appeal or to the Divisional Court under s 110 of the Courts of Justice Act, RSO 1990, c C.43. It declined to transfer the appeal but granted an extension of time. A delay claim tried inside a lien action therefore carries appeal-route risk that the same claim tried in an ordinary action does not. Decide early, and deliberately, whether the delay claim runs in the lien action or beside it.

The lien clocks: 60 days to preserve, 90 to perfect, and the 7-day notice of termination

Preservation is 60 days and perfection is 90 days, and both were left untouched by the 1 January 2026 amendments. State that plainly, because the published commentary does not. Bill 216 as introduced would have re-anchored lien expiry to the notice of annual holdback release. That proposal did not survive. Commentary published in 2024 and 2025 describing a new Ontario lien-expiry regime is describing a dropped proposal, not the law.

The section numbering is less secure than the day counts: the corpus carries preservation at s 31 and perfection at s 36 on the standard numbering and marks both UNVERIFIED. Use the day counts. Check the section numbers against the consolidated Act before pleading.

What did change is the trigger on a terminated project, and terminated projects are where the large delay claims live. Bill 60 replaced s 31(6)–(8) so that a notice of termination must be published within 7 days of termination, in the prescribed form and manner, and the date of termination is deemed to be the date the notice is published. The consequence is easy to miss and expensive: on a terminated contract the lien clock now runs from a publication date the terminating party controls. A contractor that does not watch for the publication may misdate its own 60-day window and lose the lien while believing it has three weeks left.

Two smaller 2026 changes matter to a delay file. The definition of "written notice of a lien" in s 1(1) is expanded so that delivery of a registered or given claim for lien triggers the owner's retention obligation. And design consultants now have presumptive lien rights: relevant where a delay claim runs against, or through, the consultant.

Holdback under the 2026 regime: annual release is the owner's obligation, and s 27.1 is repealed

For contracts entered on or after 1 January 2026 and running longer than one year, holdback release is now mandatory, annual and automatic, and it is the owner's obligation, not something the contractor chases. Within 14 days of each contract anniversary the owner must publish a Notice of Annual Release of Holdback (Form 6) in the prescribed manner, and payment of the accrued holdback must then be made not less than 60 days and not later than 74 days after publication, a fixed 14-day payment window that opens on day 60.

The rest of the mechanics, as they converge across the sources in the corpus:

• The release is defeated only where a lien has been preserved or perfected in the intervening period.
• The contractor must cascade the corresponding holdback down to its subcontractors within 14 days of receipt.
• Transition. For contracts entered before 1 January 2026, the first annual release falls on the second anniversary, an effective one-year moratorium. Pre-1 July 2018 contracts remain under the former Construction Lien Act. Certain pre-1 January 2026 P3 project agreements with a special purpose entity are exempt.
• The corpus marks the exact section numbering of the annual release as re-enacted (ss 26, 26.1, 26.2 and 27) UNVERIFIED. The day counts are solid. The numbers are not.

And s 27.1 (the owner's notice of non-payment of holdback) is repealed. The owner's right to publish a notice of non-payment and refuse to release holdback for incomplete or deficient work is gone. An owner that says "you are 200 days late, I am withholding the holdback" no longer has a statutory mechanism to do it. For a contractor running a delay claim, that turns the annual release into a material, recurring and automatic cash injection that is not contingent on the delay dispute being resolved.

What is left to the owner is thinner than it looks: a preserved or perfected lien, which is a third party's lever rather than the owner's, and whatever contractual set-off rights the contract actually contains. On the latter, Sayers Foods Ltd v Gay Company Ltd 2026 ONSC 918 (Divisional Court) (a decision whose neutral citation the corpus marks unverified) holds that a delay set-off asserted without a contractual foundation will not defeat payment.

Sayers Foods, the repeal of s 27.1, prompt payment and mandatory annual holdback release together mean that Ontario has systematically stripped owners of the ability to use money as leverage against a contractor's delay claim. An owner that wants to hold money back against delay must now have an express contractual delay-damages and set-off mechanism, and be ready to prove it in a 30-day adjudication.

The 30-day tail: adjudication outlives the lien, but starting one does not preserve it

There is a 30-day gap between two Ontario clocks, and it is worth knowing about. Adjudication under the Construction Act must be commenced within 90 days after the contract is completed, abandoned or terminated (s 13.5(3)). Lien preservation is 60 days. So a contractor whose lien has already expired can still commence an adjudication for another 30 days. Late on the lien is not late on everything.

The converse is the trap. Starting an adjudication does not preserve a lien. The two clocks are independent, they secure different things, and neither rescues the other. The working rule is: preserve on the 60-day clock, and adjudicate in parallel or in the tail, never treat the notice of adjudication as a substitute for preservation.

Two qualifications belong in the same breath. First, the parties may agree to extend the 90-day adjudication window, and it is undecided whether a contractual limitation clause otherwise valid under the Limitations Act, 2002 can cut it down or extend it: logically s 13.5(3) is a precondition rather than a limitation period, but the express power to extend by agreement invites the argument. Second, time itself is only adjudicable on the newest contracts: O. Reg. 264/25 s 19: one firm says s 19.1, but ODACC, the OAA and Cassels say s 19, and the corpus records the conflict as minor and prefers s 19: makes "a request for an extension of time to complete the work" adjudicable only where reasonably necessary to a subsequent determination, not on P3 projects, and not on contracts predating 1 January 2026.

Trusts: robust in Ontario, and no route past privity

Ontario has a robust statutory construction trust, and it stops at privity. In Tremblar Building Supplies Ltd v 1839563 Ontario Limited 2020 CanLII 6302 (ON SC) a subcontractor's statutory breach of trust claim and its unjust enrichment claim, both brought against the owner, were both dismissed. Trust obligations run between parties in direct contractual privity, and extending them to owners "would wholly undermine the structure of the relations contemplated under the Act". The Act is a "comprehensive scheme", and that supplies the juristic reason defeating unjust enrichment.

A subcontractor with a delay or disruption claim caused by the owner therefore has no direct trust or restitutionary route to the owner in Ontario. It runs the claim up through its own contractor, or it liens. Naming the owner as a trust defendant because the owner caused the delay is not an available shortcut, and Tremblar is the reason.

Trust status matters to a delay claim for a reason that is easy to overlook: it determines whether an owner's or a general contractor's delay-damages set-off exposes that party to personal liability for breach of trust. That is a materially different risk profile from a straightforward contractual dispute about the same money, and it varies province to province. The corpus also records UNVERIFIED that the 2018 amendments requiring trust funds to be held in a separate account with prescribed record-keeping (s 8.1) give a delay claimant a documentary discovery angle against a contractor that says the money is gone. Treat the section number as unconfirmed.

Ontario against Quebec and the rest of Canada

Ontario is meaningfully more generous than Quebec on the security of a delay claim, and the difference is structural rather than a matter of degree. Quebec's hypothèque légale secures only the plus-value (the added value) that the works give the immovable, under arts 2726 and 2952 of the Civil Code of Québec. Delay damages add no plus-value, so the Quebec security effectively does not reach them.

Ontario's test is different in kind. It is price of services or materials supplied, softened by Stucor's "can be equated to compensation for the supply", not a value-added test at all. That is precisely why extended-duration equipment and extra labour caused by owner default get through in Ontario: they add nothing whatever to the finished building, and a strict plus-value analysis would exclude them. The corpus records the honest limit on the Quebec side: no Quebec judgment holding in terms that delay damages are unsecured by the legal hypothec was located, though the plus-value limitation in arts 2726 and 2952 strongly supports the conclusion. The civil-law framework is set out on the Quebec extension-of-time hub, and the doctrinal divergence in full on Quebec versus common-law Canada. Do not carry an Ontario lien proposition into a Quebec file.

Beyond Ontario and Quebec the corpus is deliberately thin, and says so. Lien preservation periods differ: British Columbia 45 days, with a CONFLICT in the sources reporting a reduction "from 55 to 46 days" that reads like a garbled holdback-release period, and Manitoba CONFLICT 40 versus 60 days. On trusts, provisions outside Ontario, Alberta and New Brunswick are entirely unverified, and in particular whether British Columbia has any statutory construction trust at all is unconfirmed: which, given what trust status does to delay-damages set-off risk, is a gap worth closing before advising on a BC project. The province-by-province position, with its verification markers intact, is on delay regimes by Canadian province.

What these clocks are in law: conditions of a remedy, not limitation periods

The lien and holdback clocks are statutory conditions of the lien remedy. They are not limitation periods. Missing the 60-day preservation date or the 90-day perfection date destroys the security. It does not destroy the claim. A contractor whose lien has expired retains the contract claim for the full amount, delay heads included. It is simply unsecured, and it must now be recovered from the counterparty rather than from the premises.

The corollary is that the surviving contract claim runs on a different clock, and that clock is the one that can actually extinguish it. Under the Limitations Act, 2002 the basic period is two years from discovery (s 4), on the four-limb s 5 test that includes whether "a proceeding would be an appropriate means", with a 15-year ultimate period (s 15). And Ontario is the only Canadian jurisdiction that expressly permits commercial parties to shorten or wholly exclude a limitation period in a business agreement (s 22(5)–(6)), so an owner's supplementary conditions may lawfully have cut your delay claim's life short. Work through that on the Ontario limitation periods and claim accrual page before relying on two years.

None of these clocks saves any of the others. A preserved lien does not extend a contractual notice period, an adjudication does not preserve a lien, a valid notice does not stop the limitation clock, and the annual holdback release, which is now the owner's obligation, secures nothing at all. They have different triggers, different characters in law and different consequences for missing them. All five, side by side, are on Ontario delay claim clocks.

Sobre este material El contenido de la biblioteca es información general sobre la práctica de las reclamaciones de construcción, no asesoramiento jurídico. El derecho a reclamar, los plazos y el procedimiento se rigen por su propio contrato y por el derecho del lugar donde se ejecuta la obra. Revisado el 8 de agosto de 2026 · Informar de una corrección