Holdback

Current

Also: Basic holdback, Finishing holdback, Retainage, Retention

A percentage of each payment that the payer must retain under lien legislation — 10% in Ontario — until the period for registering construction liens has expired, as security for subcontractors and suppliers.

Explanation

Under Ontario's Construction Act, each payer in the contract chain retains a basic holdback of 10% of the price of services or materials supplied (s. 22(1)), and a finishing holdback of 10% applies to work supplied after substantial performance. Holdback is released once the lien period has expired without liens being preserved (or once preserved liens are resolved), typically after publication of the certificate of Substantial performance. The lien preservation period is 45 or 60 days depending on which version of the Act applies to the project. Amendments since 2018 also permit annual or phased release of holdback on qualifying contracts. US practice uses the broader contractual concept of retainage.

Practical example

On a $10 million contract, $1 million in basic holdback accumulates. The certificate of substantial performance is published, the lien period expires with no liens preserved, and the owner releases the holdback, which flows down to the trades.

Why it matters

Holdback is a major cash-flow item for contractors and trades; its timing depends on certifying and publishing substantial performance promptly.

Common confusion

Statutory holdback (required by lien legislation) differs from contractual retention or retainage, which is set by contract and may have different amounts and release conditions.

Standards and references

  1. OAA/OGCA Take-Over Procedures (Document No. 100). Ontario Association of Architects and Ontario General Contractors Association, 2019.Widely accepted professional interpretation
    Supports: Basic holdback 10% (s. 22(1)) and finishing holdback 10% (s. 22(2)); release after lien period following publication of the certificate of substantial performance · Status: Written under the former Construction Lien Act (reissued January 2019); check figures against the current Construction Act.
  2. Construction Timelines in Ontario. JD Supra.Widely accepted professional interpretation
    Supports: Lien preservation and holdback release periods of 45 or 60 days depending on applicable legislation
  3. R.S.O. 1990, c. C.30 — Construction Act, R.S.O. 1990, c. C.30. Government of Ontario.Original VDC Stack.io wording, based on the standard
    Supports: Statutory basis for holdback in Ontario · Status: Amended 2018–2019 (prompt payment and adjudication in force 1 October 2019). The e-Laws page could not be read by the research tools; section references need editor confirmation.

VDC Stack.io writes its own explanations and does not reproduce copyrighted standards text. Consult the cited standard for normative wording.

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VDC Stack.io. (2026). Holdback. In VDC Stack.io Knowledge Dictionary. Retrieved from https://vdcstack.io/dictionary/holdback/