- Substantial performance is reached when an improvement, or a substantial part of it intended for a distinct use, is ready to be used for its intended purpose, or is already being used…
- Ontario's Construction Act was built around protecting the people who supply labour and materials to a construction project — often smaller subcontractors and suppliers who are last in…
- Reaching substantial performance is often followed by: - A formal notice of substantial performance — a step used to confirm and publicize the date, which then anchors other deadlines -…
Ontario's Construction Act — known as the Construction Lien Act before it was renamed in 2018 — uses a specific concept, "substantial performance," to mark the point where an improvement is considered essentially done, even if minor items remain outstanding. That date matters far beyond bragging rights: it starts several important legal clocks for owners, contractors, and subcontractors alike.
If you work in construction, or are a property owner dealing with a project, understanding what substantial performance means — and what it triggers — helps you avoid missing deadlines that can be very hard to recover from.
What "Substantial Performance" Means in Plain Language
Substantial performance is reached when an improvement, or a substantial part of it intended for a distinct use, is ready to be used for its intended purpose, or is already being used that way — even though the work is not entirely finished down to the last detail. It is different from completion, which means the entire contract has been fully performed, including any remaining deficiencies or minor items.
In practice, an owner and contractor often need to confirm the substantial performance date formally, since it triggers deadlines that affect everyone involved in the project, not just the two of them.
Why the Construction Act Cares About This Moment
Ontario's Construction Act was built around protecting the people who supply labour and materials to a construction project — often smaller subcontractors and suppliers who are last in line to get paid. Substantial performance is the pivot point the Act uses to start winding down that protection for the main contract, because at that stage the bulk of the work — and the risk of non-payment for it — has already happened.
Substantial performance also matters because it is one of the trigger points tied to lien deadlines for parties on the project, meaning the clock for preserving a lien claim can start running from this date, depending on the party's role in the project.
What Substantial Performance Triggers
Reaching substantial performance is often followed by:
- A formal notice of substantial performance — a step used to confirm and publicize the date, which then anchors other deadlines
- The start of the basic statutory holdback release process — the Construction Act requires payers on a project to hold back a percentage of what they owe (10% of the price of the services or materials supplied, as of mid-2026 — verify the current figure) until the applicable lien period expires
- A mandatory annual holdback release regime for longer projects — Ontario's Construction Act now includes a requirement for annual release of accrued holdback on projects that span more than one year, with its own notice and payment mechanics; if your project could be affected, this is a detail to confirm with a lawyer rather than assume from general guidance
- The countdown toward lien preservation and perfection deadlines — for those whose lien rights are tied to the substantial performance date rather than their own last date of supply
Preservation and Perfection: The Clock That Starts Ticking
Once the relevant triggering date is reached — whether that is substantial performance or a party's own last date of supplying services or materials — two short, strict deadlines follow (current as of mid-2026 — confirm before relying on them):
- Lien preservation period: 60 days. A lien claimant must register (preserve) their claim for lien within this window, or the lien right is generally lost.
- Lien perfection period: 90 days from the last day the lien could have been preserved. A preserved lien must then be perfected — essentially, turned into an actual court action — within this second window, or it generally expires.
Missing either deadline usually ends the lien remedy specifically, though the underlying contract debt claim may still be pursued separately through an ordinary lawsuit, subject to the general limitation period that applies to civil claims.
Substantial Performance vs. Completion vs. Last Supply
| Concept | What It Means | Why It Matters |
|---|---|---|
| Substantial performance | The improvement (or a distinct part) is ready for its intended use, minor items aside | Can trigger holdback release and lien deadlines for the head contract |
| Completion | The entire contract is fully performed, including remaining deficiencies | Marks the true end of the contract, relevant to final holdback and final payment |
| Last supply | The last date a specific subcontractor or supplier provided services or materials | Often the trigger date for that party's own lien deadline, separate from the general contract's substantial performance date |
Because different parties on the same project can have different trigger dates, it is a mistake to assume everyone's lien deadline runs from the same event.
Common Mistakes Contractors and Owners Make
- Assuming the project is "safe" from liens the moment the main work looks finished, without confirming the actual legal substantial performance or last-supply date
- Missing the short 60-day preservation window because no one tracked the triggering date carefully
- Releasing holdback early, before the applicable lien period has actually expired
- Overlooking that a lien lost through a missed deadline does not necessarily kill the underlying debt claim — but that claim then has to be pursued through an ordinary lawsuit instead
Frequently asked questions
Who decides when substantial performance has been reached?
It is generally assessed against the statutory test in the Construction Act and confirmed through a formal notice process, though disputes over whether and when it occurred do happen and can end up before the courts.
Does substantial performance mean the contractor doesn't get paid the rest?
No — it means the process for releasing holdback on the main contract begins, but the contractor is still entitled to be paid for the work, including amounts properly held back, once the applicable conditions are met.
What happens if I miss the 60-day lien preservation deadline?
Your ability to register a construction lien for that claim is generally lost. You may still be able to pursue the underlying debt through an ordinary lawsuit, but you lose the specific security a lien provides against the property.
Is a construction lien the same as getting paid?
No — a lien only secures your claim against the property. You still need to pursue and prove the underlying debt, often through the lien action itself or a separate lawsuit, to actually collect.
This is a litigation question
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