As of January 1, 2026, important amendments to Ontario’s Construction Act, which for the most part apply retroactively, took effect. It is imperative that those involved with construction projects in Ontario are aware of these recent amendments and the impact on their legal rights, remedies and obligations.
In part two of this series, we will be addressing: 1) changes to interim adjudication; 2) amendments to the trust provisions; and 3) new protections for design professionals.
Changes to Interim Adjudication
On October 1, 2019, interim adjudication was introduced to the Construction Act as a mechanism for resolving construction disputes quickly and efficiently during the life of a project, without requiring parties to resort to costly and time-consuming litigation. As of January 1, 2026, several significant amendments to the adjudication provisions have taken effect, which have expanded both the scope and availability of adjudication and introduced greater flexibility in the selection of adjudicators.
Since January 1, 2026, the types of disputes that may now be referred to adjudication have been expanded. Parties may now adjudicate matters relating to the scope of work required to be performed, a request for a change in the contract price, or a request for an extension of time to complete the work. Additionally, a party to whom payment is guaranteed under a labour and material payment bond (if required by subsection 85.1(4) of the Construction Act) may refer a dispute in relation to payment to adjudication. As before, parties remain able to adjudicate any other matters that are not prescribed, upon agreement.
The time period during which adjudication is available has also been extended. Previously, a notice of adjudication had to be delivered before a contract or subcontract was completed, unless the parties agreed otherwise. As of January 1, 2026, parties now have a 90-day window following the completion, abandonment, or termination of a prime contract within which to give notice and commence adjudication in relation to that contract. For an adjudication in respect of a subcontract, the notice of adjudication must be given within 90 days of the earliest of: 1) the date the prime contract is completed, abandoned or terminated; 2) the date on which the subcontract is certified to be completed under section 33; and 3) the date on which the subcontractor last supplies services or materials to the improvement. The extended time period for adjudications is a meaningful change for disputes that crystallize at the end of, or following, a project’s completion.
Furthermore, adjudications previously had to be conducted by individuals listed on the roster maintained by Ontario Dispute Adjudication for Construction Contracts (ODACC), which is the organization responsible for administering construction-related adjudications and for training and qualifying adjudicators. The amendments now permit parties to jointly appoint a private adjudicator, provided the individual is qualified and certified by ODACC and meets all applicable regulatory requirements. Importantly, private adjudicators are subject to the same code of conduct as roster adjudicators.
The amendments to the Act also introduce a formal procedure for challenging an adjudicator’s jurisdiction (meaning, whether the adjudicator has legal authority to decide the particular issue) and confirm that an adjudicator is entitled to decide a challenge based upon jurisdiction if so requested by a party. Notably, parties are required to raise jurisdictional objections at the earliest opportunity. Failure to do so may need to be justified if judicial review on that basis is subsequently sought. Parties who delay in raising jurisdictional grounds may find themselves precluded from challenging a determination at a later stage. Accordingly, those involved in adjudication proceedings should be alive to this obligation from the outset.
Trust Provisions
The Construction Act has long included trust provisions designed to protect those below the owner in the construction pyramid by ensuring that funds received for a construction project are held and applied for the benefit of those who supplied services or materials. The January 2026 amendments introduced several changes that strengthen and clarify those protections.
Several ancillary amendments now explicitly confirm that amounts held as statutory holdback constitute trust funds under the Act. While the trust character of holdback has long been understood as implicit in the legislative framework, the amendments provide express statutory confirmation. This clarification may have practical significance in insolvency proceedings and priority disputes, where the characterization of holdback as trust property can affect the rights of competing claimants.
A significant procedural change has also been made through amendments to Ontario Regulation 302/18 under the Act. Previously, there was uncertainty as to whether lien claims and trust claims could be pursued together in a single court proceeding. That question has now been resolved. Lien claims and trust claims may be combined in a single action where they arise out of the same or related facts. This provides a more efficient and cost-effective path for claimants who have both remedies available, while avoiding the need for parallel proceedings.
The mandatory annual holdback release framework also has important implications for the flow of trust funds through the contracting chain. As mentioned in part one of this series, under section 26 of the Construction Act, owners are now required to publish a notice of annual release of holdback within 14 days of each prime contract anniversary date, specifying the amount of holdback to be paid and the intended payment date. The holdback must then be released no earlier than 60 days and no later than 74 days after the notice is published. Once the owner releases the annual holdback to the contractor, the contractor has 14 days to pay all accrued holdback amounts to each subcontractor. Subcontractors have corresponding obligations to sub-subcontractors. Failure to comply with these cascading payment obligations may give rise to trust liability for those who improperly withhold funds received for the benefit of others.
Design Professionals
Prior to January 1, 2026, design professionals (including architects, engineers, and others who provide plans, drawings, or specifications) often faced challenges in asserting lien rights where their services were rendered before any physical improvement to the property had commenced. Section 14(1) of the Construction Act created a lien for a person who supplies services or materials to an improvement, which in practice required that an improvement had actually been made. Design professionals whose projects were cancelled or delayed before construction began were frequently left without a clear statutory remedy.
As of January 1, 2026, section 14(4) of the Act addresses this gap directly. A design, plan, drawing, or specification prepared for the making of an improvement is now deemed to be a supply of services to that improvement. This deems the pre-construction work of design professionals to engage the lien provisions of the Construction Act, even where the improvement never proceeds.
The protection of section 14(4) is triggered by the owner’s retention of a holdback. Where an owner retains a holdback in connection with design services provided for a planned improvement that does not ultimately proceed, the design professional is deemed to have a lien on the real property to which those services were directed. By tying the deemed lien right to the retention of holdback, the updated Act provides clearer and more reliable protection for those whose work is integral to a project but is performed entirely before any physical construction begins – precisely the circumstances in which design professionals have historically been most vulnerable.
Contact Us
The Construction Act is a powerful piece of legislation that grants significant rights and remedies to those in the construction industry. It is also complex and technical, and it imposes important obligations on certain parties. Those impacted by the Construction Act must be familiar with the recent amendments to not jeopardize their rights, remedies, and obligations, especially since a failure to make use of available rights and remedies or comply with statutory obligations can have costly consequences.
If you would like more information or assistance regarding any of the matters discussed in this Construction Alert, please contact our firm.
