Ontario’s Bill 60: Key Changes to the Construction Act Arriving in 2026

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Introduction

Ontario’s construction sector is bracing for significant legislative change as key amendments to the Construction Act will take effect on January 1, 2026.^[1] These updates, introduced through Bill 60 and shaped by industry feedback, will adjust lien timelines, holdback rules and contract termination requirements.

The amendments originated from an independent review by leading construction law expert Duncan Glaholt (the “Final Report”)^[2] and address industry feedback on prior reforms.

Legislative Timeline and Implementation

Our previous article summarized the initial amendments based on the Final Report, which were introduced in November 2024 as part of omnibus budget legislation, Bill 216, Building Ontario For You Act (Budget Measures), 2024 (the “2024 Amendments”).

Based on industry and stakeholder feedback, the 2024 Amendments were followed by further refinements in Schedule 2 of the Fighting Delays, Building Faster Act, 2025 (“Bill 60”). Bill 60 underwent its first reading by the Ontario government on October 23, 2025, and received royal assent on November 27, 2025.

To support these statutory changes to the Construction Act, four new regulations were filed on November 27, 2025 (see O. Reg. 264/25: Adjudications under Part II.1 of the Act, which also revokes O. Reg. 306/18; O. Reg. 265/25: Procedures for Actions under Part VIII; O. Reg. 266/25: General; and O. Reg. 267/25: Forms).

The Construction Act changes introduced through Bill 216 and Bill 60 will come into effect on January 1, 2026. However, stakeholders should note that some of the changes, such as annual release of holdback, will be subject to transition provisions and will not come into effect immediately.

Along with changes to the Construction Act, Bill 60 will bring a suite of legislative amendments to the Planning Act, the Development Charges Act, 1997, the Residential Tenancies Act and the Municipal Act, all aimed at speeding up planning approvals across the Province of Ontario. Our summary article on these legislative changes can be found here.

Annual Holdback Release No Longer Triggers Lien Expiry

The most notable revision in Bill 60 is the separation of the annual holdback release process from the expiry of construction liens. Under the 2024 Amendments, release of annual holdback would trigger the expiry of related liens. With the new amendments, this is no longer the case. Instead, the timeline for lien preservation, perfection and expiry remains tied to the Construction Act’s current milestones in section 31.

With Bill 60, annual holdback release will now be tied to publication of the notice of annual release, rather than to the expiry of liens. This adjustment, in response to the industry’s practical concerns associated with annual expiry of lien rights, restores traditional processes surrounding lien security while providing greater predictability for project cash flows through annual holdback releases.

Revised Holdback Restrictions

Section 30 of the Construction Act is aimed at ensuring that holdback funds are reserved for lien claims, not used as set-off or security for other performance issues.

Amended Section 30 removes the reference to “defaults” and instead applies the prohibition on the use of holdback funds to all circumstances where a contract or subcontract is “abandoned or terminated.”

This change acknowledges that contracts do not always end in a default and in doing so preserves the interests of contractors and subcontractors in the holdback fund, even in situations such as mutual terminations or terminations for convenience.

Stricter Notice Requirements for Terminations

Owners and contractors will be required to publish a notice of termination within seven days of ending a contract. The date on which this notice is published will be considered the official termination date for the purposes of calculating the lien expiry period. This measure is designed to provide clearer timelines and reduce ambiguity regarding when lien rights will expire.

Notably, it is clear under the amendments that this deeming provision will not prejudice the right of any party to contest the validity of the termination.

Transitional Provisions and Special Cases

Importantly, for contracts entered into before the amendments come into force on January 1, 2026, the first annual holdback release will occur on the second anniversary of the contract following January 1, 2026, rather than immediately.

By way of example, if a contract was entered into on August 15, 2024, the annual holdback release will come into effect as of August 15, 2027.

For contracts entered into after January 1, 2026, the annual holdback release date will commence on the first anniversary of the contract.

In addition, Bill 60 creates a special carve-out with the addition of subsection 87.4(5) for certain prescribed Public-Private Partnership (P3) contracts entered into prior to the implementation of the 2024 Amendments. These projects will remain unaffected by the annual holdback release rules, acknowledging the complexity and long-term nature of such agreements.

Key Takeaways

Bill 60 addresses practical concerns raised by earlier reforms contained in the 2024 Amendments, aiming to strike an improved balance between the often-competing interests of project stakeholders while also increasing administrative efficiency.

Owners, contractors, subcontractors and suppliers should become familiar with the new amendments, update their contract management and payment procedures, and ensure they are in a position to comply with the new seven-day notice requirement for terminations.

The Construction Group at Aird & Berlis LLP will continue to monitor developments in regard to the amendments to the Construction Act. If you have questions or require assistance related to dispute resolution under the Construction Act, please contact the authors or a member of the group.

[1] Order in Council 1523/2025, ordered November 27, 2025.