How does holdback release work on a large project completed in phases in Ontario?

The Construction Act allows holdback to be released on a phased or milestone basis for larger projects, rather than requiring the entire project to be completed before any holdback is released, provided the contract is structured to allow for this and the applicable notice and timing requirements under the Act are followed for each phase. This lets contractors and subcontractors working on an earlier phase get paid their holdback sooner, rather than waiting for a multi-year project to fully wrap up, while still preserving the protection holdback is meant to provide for that phase's subcontractors and suppliers.

For longer projects generally, the Construction Act also now includes a mandatory annual holdback release mechanism tied to each anniversary of the contract, separate from any phased or milestone-based release built into the specific project structure. Because the timing rules, required notices, and interaction between phased releases and the annual release regime are technical and depend heavily on how a specific contract and project are structured, this is an area where getting the mechanics confirmed against the actual contract and project schedule with a lawyer is particularly important before relying on any release having properly occurred.