Annual Holdback Release: A Step by Step Timeline for Ontario ICI Contractors

The mandatory annual holdback release is the single biggest operational change in the 2026 Construction Act amendments. If your contracts run longer than one year, you now have a statutory obligation to release holdback on a fixed schedule. No exceptions, no opt-out, no minimum contract value.

This article walks through the full timeline using a concrete example so you can see exactly when each deadline hits, who is responsible for what, and how the transition rules apply to contracts signed before January 1, 2026.

The Example Scenario

A general contractor signs a contract on March 15, 2026 for an 18-month ICI office renovation in Ontario. The contract value is $4.2 million. The owner withholds the standard 10% holdback on each progress payment throughout the project. Because the contract duration exceeds one year, the mandatory annual holdback release under Section 26 of the Construction Act applies.

Here is how the timeline unfolds, step by step.

Step 1: First Anniversary (March 15, 2027)

On the first anniversary of the contract, the annual holdback release cycle begins. The owner has 14 days from this date to publish a Notice of Annual Release of Holdback using the new Form 6. Publication must appear on one of the three designated construction trade news websites: Daily Commercial News, Link2Build, or Ontario Construction News.

The Form 6 notice specifies the holdback amount accrued during the first contract year and the intended payment date. In our example, assume the owner publishes the notice on March 29, 2027 (the last day of the 14-day window).

Step 2: The 60-Day Lien Window (March 29 to May 28, 2027)

Once the Form 6 notice is published, a 60-day lien preservation window opens. During this period, any party with a lien right can preserve a lien against the holdback. This window protects subcontractors and suppliers who have not been paid for work performed during the first contract year.

If no lien is preserved or perfected during these 60 days, the process moves to the release phase. If a lien is preserved, the holdback release pauses until the lien is discharged, vacated, or otherwise resolved. The owner cannot release holdback that is subject to a preserved lien.

As a GC, this is the window where you need to confirm that all your subcontractors and suppliers have been paid (or have no outstanding lien claims). Any preserved lien delays your holdback receipt.

Step 3: Holdback Release Window, Days 60 to 74 (May 28 to June 11, 2027)

Assuming no liens were preserved, the owner must release the accrued holdback to the general contractor no earlier than day 60 and no later than day 74 after the Form 6 publication date. In our example, that window runs from May 28 to June 11, 2027.

This is a hard deadline. The owner does not get to choose whether or when to release the holdback. If no lien was preserved and day 74 passes without payment, the owner is in breach of the Act. The old Section 27.1 option that allowed owners to issue a notice of non-payment to block holdback release has been repealed.

Step 4: GC Releases to Subcontractors (Within 14 Days)

Once the GC receives the holdback payment from the owner, the GC has 14 days to release the corresponding holdback to each subcontractor. This is not discretionary. The 14-day clock starts on the date the GC receives payment.

Subcontractors, in turn, must release holdback to their sub-subcontractors within another 14 days. The cascade continues down the chain, with each tier getting a 14-day window to pass holdback to the tier below.

Step 5: Repeat Annually

On March 15, 2028 (the second anniversary), the entire cycle repeats for holdback accrued during the second contract year. The owner publishes another Form 6 within 14 days, the 60-day lien window opens, and release follows between day 60 and 74. This continues every year until the contract is complete and a certificate of substantial performance is issued.

For our 18-month contract, the project should be complete by approximately September 2027. But the annual release for the first year's holdback still follows its full timeline regardless of project completion status. The final holdback release (for amounts accrued after the first anniversary) follows the standard completion-based holdback release process, not the annual release mechanism.

The Transition Scenario: Contracts Signed Before January 1, 2026

The timeline above applies cleanly to contracts signed on or after January 1, 2026. But what about contracts that were already in progress when the amendments took effect? The transition rules create a different starting point.

Example: Contract Signed June 1, 2025

A GC signed a contract on June 1, 2025, before the amendments came into force. Under the transition rules, the first mandatory annual release occurs on the second contract anniversary that falls after January 1, 2026. Here is how to calculate it:

1. June 1, 2026 is the first contract anniversary after January 1, 2026.
2. June 1, 2027 is the second contract anniversary after January 1, 2026.
3. The first mandatory annual release triggers on June 1, 2027.

Here is the critical detail: the holdback subject to that first release is not just one year's worth. It includes all holdback accumulated from the contract start date (June 1, 2025) through June 1, 2027. That is two full years of holdback released in a single cycle. For a large-value contract, this can be a substantial sum.

The P3 Exception

Public-private partnership agreements entered before January 1, 2026 are exempt from the mandatory annual holdback release provisions. If your contract falls under a P3 structure signed before the effective date, the annual release does not apply. P3 agreements signed on or after January 1, 2026 follow the standard rules.

Common Questions

What if the owner misses the 14-day Form 6 publication deadline?

The Act does not specify a separate penalty for late publication, but failure to comply with the annual release obligations is a breach of the Act. Contractors should document the missed deadline and consider whether adjudication is appropriate to enforce the release.

Can the owner release holdback early?

Yes. The 60-day lien window and the day 60 to 74 release window set the earliest and latest dates. An owner cannot release before day 60 (to protect lien claimants), but there is no prohibition on releasing on day 60 exactly.

What happens if a lien is preserved during the 60-day window?

The holdback release pauses for the amount subject to the lien. If the lien covers only a portion of the holdback, the owner may release the unencumbered portion and hold back only the amount necessary to satisfy the lien claim. The exact mechanics depend on the lien amount and the total holdback available.

Building the System Around the Deadlines

The annual holdback release adds a recurring cycle of hard deadlines to every contract longer than one year. For a GC with 10 active multi-year contracts, that is 10 separate annual release timelines running in parallel, each with its own anniversary date, publication deadline, lien window, release window, and sub-distribution deadline.

Tracking this in spreadsheets is possible for a handful of projects. It breaks down quickly at scale. You need a system that automatically calculates every deadline from the contract start date, alerts you when action is required, and logs each step for audit purposes.

The contractors who set up their tracking systems now, before the first wave of mandatory annual releases hits in early 2027, will have a significant advantage over those scrambling to comply retroactively. The deadlines in the Act are not suggestions. They are statutory obligations with real consequences for non-compliance.