The builder's lawyer wanted the Caledonia holdback released early

The situation

The builder's lawyer opened with a letter asking Hagop and Saskia to release the full statutory holdback on their new build early, citing 'delays in closing the file' and enclosing a short list of what the letter called minor punch-list items, alongside a proposed release form ready for signature. It arrived nine days after closing, before the standard lien period had even come close to running, and before two of the deficiencies noted at the pre-closing walkthrough, a subfloor issue in the main bathroom and an improperly sealed exterior door, had been touched.

Hagop, a construction project manager, and Saskia, an air traffic controller, had bought the home for their mother, Marieke, who was moving from a smaller apartment into a house with a main-floor bedroom suited to her needs as she aged. The purchase price sat in the 900,000s, financed jointly by the two siblings with Marieke contributing a portion from the sale of her previous home. None of the three intended to live in the property as their sole home in the ordinary sense, but Marieke would occupy it, and the siblings had structured the purchase carefully to make sure her name was on title alongside theirs.

Ontario's construction lien framework requires a holdback, a percentage of the value of the work and materials as they're actually supplied, to be retained until the lien period has run its course - a clock that starts when a certificate of substantial performance is published, or, where none is published, when the contract is completed, abandoned, or terminated. Its first job is to guarantee a fund for subcontractors and suppliers who might otherwise go unpaid; the benefit to an owner who keeps the holdback properly is that doing so caps their own exposure to a lien. On a new home purchase from a builder, that holdback also functions as leverage: as long as it sits unreleased, the builder and its trades have a strong incentive to finish outstanding work and resolve any payment disputes among themselves before the money is gone.

Before the siblings came to us, an uncle with some general contracting experience had reviewed the builder's letter and told them, informally, that releasing a partial amount early to 'keep things friendly' with the builder was standard practice and would help get the punch-list items finished faster. Acting on that advice, Hagop had already replied to the builder's lawyer suggesting they were open to releasing half the holdback immediately, an email that, once we saw it, had effectively signalled to the other side that the family did not fully understand what the holdback was protecting or how firmly they intended to hold their position.

By the time Hagop and Saskia called our office, roughly two weeks had passed since closing, the subfloor issue and the door seal remained unfixed, and the builder's lawyer was treating the early email as an agreement in principle that needed only a signature to complete.

What was actually at stake

The statutory holdback on this build came to a meaningful sum, in the mid five figures, calculated as a percentage of the value of the work and materials supplied. That was the leverage sitting on the table, and it was the only real tool the family had to make sure the subfloor and door issues, along with several smaller items on the punch list, actually got fixed rather than becoming the family's problem to pay for out of pocket after the builder had already been paid in full.

Releasing the holdback early, before the lien period expired, carried a second risk beyond simply losing leverage over unfinished work. The holdback period exists in part to give subcontractors and suppliers time to register a claim if the builder has not paid them for work already done on the property. If the family released funds early and a subcontractor later registered a valid claim against the property for unpaid work, the family could find themselves exposed to a claim on title even though the dispute was between the builder and its own trades, not something the family had any part in.

The builder's position, communicated through its lawyer, was that the punch-list items were minor cosmetic matters that did not justify holding back the full statutory amount, and that the delay in closing the file was costing the builder money it should not have to absorb for issues it considered essentially resolved or about to be resolved. There was a partial truth in that: several items on the list genuinely were minor, the kind of small deficiencies common in any new build, like a scuffed baseboard and a cabinet door that needed rehanging.

But two items were not minor. A subfloor problem in a bathroom that a mobility-limited resident would use daily was a genuine safety and function issue, not cosmetic, and an improperly sealed exterior door created a real risk of water intrusion and heat loss going into the following winter. Conflating those two items with a scuffed baseboard, in a single punch list pushing for one blanket early release, was the crux of the disagreement, and Hagop's earlier email offering to release half the holdback had already muddied the family's position on how firmly they could push back.

What we did

1. Withdrew the earlier offer to release half the holdback in writing. We sent a clear message to the builder's lawyer stating that the prior email did not reflect the family's final position and that no partial release would be agreed to without a documented schedule tying any release to specific completed work, closing the door the uncle's well-meant advice had opened before it cost the family any real leverage.
2. Documented every outstanding deficiency with dated photographs and a written description. Hagop's construction background helped here: he walked the property with us over the phone, describing the subfloor issue and the door seal in specific, technical terms, which we put into a formal deficiency list attached to our response, so the builder could not later claim the items were vague or unspecified.
3. Confirmed the statutory holdback period and calculated the earliest date it could lawfully expire. We calculated the actual date the holdback period would run based on the substantial completion date the builder had certified, and confirmed the builder's request for early release fell well inside that window, giving the family a concrete date to hold the builder's lawyer to rather than an open-ended standoff over a moving target.
4. Separated the punch list into safety and function items versus genuinely minor cosmetic items. We proposed splitting the holdback conceptually into two categories, tying release of the larger portion to the subfloor and door repairs specifically, and treating a smaller reserved amount as tied to the cosmetic items, which gave the builder a path to some release without waiting on everything on the list at once.
5. Set firm inspection milestones before any funds moved, rather than accepting the builder's own assurance that work was complete. We proposed that once the builder's trade finished the subfloor and door repairs, an inspection, with Hagop present given his construction background, would confirm the work met an acceptable standard before any portion of the holdback tied to those items was released to the builder, so payment followed verified completion rather than a promise.
6. Advised the family directly on why the uncle's earlier suggestion had created real risk, since acting on informal advice before speaking to a lawyer is what had put the family in a weaker position in the first place. We explained plainly that releasing funds to keep things friendly removes the only real incentive a builder has to finish outstanding work quickly, and that a builder already paid in full has little practical reason to prioritize a small remaining punch list over its next project.
7. Negotiated a written release schedule with the builder's lawyer rather than leaving the terms to an informal understanding that could later be disputed. After some back and forth, we agreed to a schedule releasing a defined portion of the holdback once the two major items were inspected and confirmed complete, with the remaining reserved amount held until the statutory lien period itself had fully run, protecting against any late-registered subcontractor claim.
8. Confirmed no liens had been registered before releasing the final reserved amount, rather than assuming the passage of time alone made the property safe to release funds against. Once the lien period expired, we conducted a final title search to confirm no construction lien had been registered against the property, and only then authorized release of the last portion held back specifically for that purpose.

The outcome

The subfloor and door repairs were completed roughly five weeks after closing, inspected with Hagop present, and the larger portion of the holdback tied to those items was released to the builder shortly after. The family agreed to release that portion before the full statutory lien period had run, a genuine compromise, in exchange for the builder completing the major repairs on a firm schedule rather than an open-ended promise with no date attached to it.

A smaller amount, tied to the remaining cosmetic items and to the statutory lien protection itself, stayed in holdback until the full period expired and a title search confirmed no lien had been registered against the property. Two of the minor cosmetic items, the scuffed baseboard and the cabinet door, were never fixed to the family's satisfaction; the builder eventually offered a modest credit against the final holdback amount instead of completing the repair, and the family accepted it rather than continue chasing a small item that was costing more in time and legal fees than it was worth to pursue further.

The compromise here is real: the family gave up strict adherence to the full statutory timeline in exchange for getting the safety-relevant repairs done faster, and accepted a cash credit rather than a completed repair on the smallest items. What they avoided was the larger risk, releasing the full holdback early on the uncle's advice, before either the major deficiencies were fixed or the lien period had run, which would have left Marieke living with an unresolved subfloor issue and no financial leverage left to get it addressed.

Marieke moved into the main-floor bedroom once the subfloor repair was confirmed complete, roughly six weeks after closing. Hagop and Saskia both said afterward that the early email offering a partial release, sent on their uncle's advice before either of them had spoken to a lawyer, was the moment that could have cost them the most if it had gone unchallenged.

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