Do You Need to Hold Back 10% on a Home Renovation in Ontario?

You've hired a contractor for a kitchen remodel or a bathroom renovation, and somewhere along the way you heard you're supposed to hold back part of the payment. The holdback on a home renovation in Ontario often catches homeowners by surprise — it applies more broadly than most people expect, and skipping it can leave you exposed even after you've paid your contractor in full.

This guide explains what the holdback obligation is, why it applies even to smaller residential projects, and what a typical holdback looks like in practice.

The Short Answer

Generally, yes. Ontario's Construction Act requires anyone paying for an "improvement" to a property — including a homeowner hiring a contractor for a renovation — to hold back a percentage of what's owed until the lien period tied to that payment has passed. The obligation isn't limited to large commercial builds; it's a general feature of how the Act protects everyone who supplies work or materials on a project, including the subcontractors and suppliers your own contractor hires.

Why the Rule Applies to Small Jobs Too

The holdback exists to make sure there's a pool of money available to pay subcontractors and suppliers if your general contractor doesn't pay them, even though you, the homeowner, already paid the contractor in full. Without it, a homeowner could pay their renovation contractor everything owed, the contractor could fail to pay a subcontractor or supplier, and that unpaid party could still have lien rights against your home.

This is exactly why the size of the project doesn't create an exemption: the risk the holdback protects against — an unpaid sub or supplier further down the chain — exists on a modest kitchen renovation just as much as it does on a large commercial build.

What a Holdback Looks Like in Practice

The statutory holdback is a percentage of the price of the services and materials as they're supplied, generally released once the applicable lien period has expired without a lien being registered, or once any registered lien is dealt with. As a simple illustration, on a renovation contract you would generally hold back a portion of each payment — commonly discussed as roughly a tenth of what's owed — rather than paying your contractor 100% of every invoice as it comes in.

The exact mechanics, including how holdback applies to progress payments versus a single final payment, can get technical. Your contract, and a lawyer if needed, can help you apply it correctly to your specific project. (Ontario's Construction Act set the statutory rate at 10% of the price of services and materials supplied as of mid-2026 — figures like this can change, so verify the current percentage before you finalize your numbers.)

A Simple Illustration

Say your renovation contract is for a round, hypothetical $20,000. Instead of paying that full amount as invoices come in, you would generally hold back a slice of each payment — illustratively, around a tenth — so that a portion of the total price is still sitting with you, unpaid, once the visible work is done. That reserved amount is what stands ready to protect an unpaid subcontractor or supplier if your contractor doesn't pay them, rather than leaving that risk to land on your home through a lien.

This is only a simplified illustration to show the idea, not a fee, rate, or figure to rely on for your own project — your contract and a lawyer can help you calculate the actual holdback correctly.

A Homeowner's Holdback Checklist

• [ ] Confirm your renovation contract addresses the statutory holdback, not just the total price.
• [ ] Don't release the full contract price to your contractor before the applicable lien period has passed.
• [ ] Keep records of payments made and amounts held back.
• [ ] Ask your contractor for confirmation that subcontractors and suppliers have been paid before releasing holdback.
• [ ] If a lien is registered against your home, get legal advice promptly rather than trying to resolve it informally.

Frequently asked questions