The Holdback Clock That Ran Out Before the Call Came In

The situation

Heather runs a general contracting business that builds large custom homes across the Whitby area. In 2025 she took on her biggest project yet: a roughly $9,000,000 build for Piotr, an investment advisor, and Marek, a dentist who owns his own practice. The two were building a large custom home and had the capital to move quickly through the build without financing delays, which made the project attractive to Heather from the start.

Construction went well for the better part of a year. Heather's crews and subcontractors moved through the framing, mechanical, and finishing phases roughly on schedule, and Piotr and Marek paid progress draws as invoiced — minus the statutory holdback. Under Ontario's Construction Act, an owner must hold back 10% of the value of the work at every stage, and cannot release it until a set period after the contract is substantially performed or completed, provided no one has registered a lien against the property in that window. On a project this size, that holdback added up: roughly $900,000 sitting with Piotr and Marek, meant to protect Heather's subcontractors and suppliers if anything went wrong.

Substantial performance was certified, the home was substantially finished, and Heather expected the holdback period to run its course and the funds to be released. Instead, Piotr and Marek came back with a list of alleged deficiencies — issues with finishing work, some mechanical items, a handful of items Heather's team disputed outright — and declined to release any of the holdback until the list was resolved. Heather had never had a deficiency dispute of this size before. Most of her prior projects were small enough that a phone call and a punch-list walkthrough sorted things out within a week or two, and she initially treated this one the same way, assuming a $900,000 holdback would eventually work itself out through the same informal back-and-forth that had always worked before.

The problem

Heather tried to resolve the deficiency list directly with Piotr and Marek for several months. Some items she agreed to fix. Others she considered unreasonable or already addressed. The conversation dragged, emails went unanswered for weeks at a time, and the holdback sat untouched while Heather's business absorbed the cash flow strain of a $900,000 gap on a single project.

What Heather did not realize — because no one had explained it to her — was that her right to secure that holdback with a construction lien was not open-ended. Under the Construction Act, a contractor has a strict 60-day window, running from the earlier of the certificate of substantial performance being published or the contract being completed, to register a claim for lien against the property, and a further strict window after that to perfect it by starting a court action. Miss it, and the lien right is gone — permanently, not extendable by agreement or good faith negotiation.

Heather's project had run in visible phases, with the framing and structural work wrapped up well before the finishing trades, and she assumed that gave her separate breathing room on the earlier work. It did not. Her contract with Piotr and Marek was a single prime contract for the whole build, and a single contract carries a single lien deadline, not one per phase. Substantial performance on the home had been certified months before Heather called, right around when the deficiency list first arrived, and that one publication date started the 60-day clock running on the entire $900,000 holdback — framing, mechanical, and finishing alike. By the time several months of informal back-and-forth with Piotr and Marek had passed, that window had closed on the whole holdback, not on the early phase alone. Every dollar of it was, on its face, no longer securable by a fresh lien registration.

That did not mean every dollar was undefended. The Construction Act does more than create lien rights: it also requires that contract funds and holdback money an owner receives or withholds be held in trust for the contractor beneath them, and for that contractor's subcontractors and suppliers in turn. Withholding money beyond what genuine deficiencies justified is a breach of that trust, not simply a slow-paying debtor, and a breach of trust claim does not run on the same 60-day clock as a lien. It gave Heather's team a second, still-live route to press Piotr and Marek even with the lien window closed — though, as with any claim that is not backed by a registered lien on title, it carried less built-in leverage than the lien would have, and Heather's own cash flow could not simply wait out a slow-moving negotiation on a $900,000 gap.

What we did

1. Mapped the actual, single lien deadline. Heather's contract with Piotr and Marek was one prime contract for the whole build, so there was one preservation deadline for the entire $900,000 holdback, not a separate one for each phase of work. We pulled the certificate of substantial performance, confirmed its publication date, and measured the 60 days that followed. That window had already closed on the whole holdback by the time Heather called — framing, mechanical, and finishing alike — which meant a fresh lien registration was no longer available for any part of the $900,000, not just the earliest phase of work.
2. Turned to the Construction Act's trust provisions instead. With lien registration foreclosed, we looked past the lien remedy to the Act's separate requirement that owners hold contract funds and holdback money in trust for the contractor below them. Withholding money beyond what genuine deficiencies justified is a breach of that trust, not simply a slow-paying debtor, and a breach of trust claim does not run on the same 60-day clock as a lien. This gave Heather real leverage again, built on a legal footing Piotr and Marek's own lawyer could not simply wait out.
3. Checked whether interim adjudication was still open. Ontario's Construction Act also allows a faster, binding-until-trial process for resolving payment disputes without a full trial, so we tested whether that route remained available before recommending anything else. It did not: that process has to be started before the contract is completed, and Heather's contract had already reached that point by the time she called. Ruling it out on the facts, rather than skipping past it, meant we could tell Heather honestly which doors were still open and which had already closed.
4. Sorted the deficiency list into what was owed and what was defensible. Not every item on Piotr and Marek's list held up. Our team worked with Heather to separate genuine, documented deficiencies from items that had already been corrected or that fell outside the scope of the original contract, building a record that would hold up if the trust claim went further, whether in negotiation or in front of a judge.
5. Negotiated a resolution using the trust claim as leverage. With the deficiency claims sorted into what was owed and what was disputed, and a breach of trust claim ready to be filed if talks stalled, we opened settlement discussions with Piotr and Marek's lawyer. A live trust claim changes those conversations in much the way a registered lien would have, because it exposes the owners to something broader than an unpaid bill and puts real pressure on them to resolve matters rather than test it in court. After accounting for roughly $100,000 in deficiencies both sides agreed were legitimate, and a further discount reflecting the absence of lien security, the parties settled for about $650,000.

The outcome

Heather recovered $650,000 of the original $900,000 holdback, negotiated through a breach of trust claim rather than a registered lien. The $250,000 gap broke down into two pieces: $100,000 in deficiencies that turned out to be legitimate, and roughly $150,000 that reflected the discount of negotiating without lien security behind her — a claim against two individuals, however creditworthy, simply carries less pressure than a claim registered against their property.

The trust claim mattered more than the dollar figure suggests. Once Piotr and Marek's lawyer understood that Heather was prepared to plead breach of trust rather than a simple debt claim, and that the allegation would put the handling of the holdback funds themselves in issue rather than just the underlying deficiency dispute, the pace of the negotiation changed noticeably. It was not the same leverage a live lien would have given her over the full $900,000 — nothing fully replaces security registered against title — but it was real leverage, and it kept the file from becoming a slow-moving debt collection matter with no natural pressure point.

Heather was candid afterward that the outcome, while workable for her business, was avoidable. Had she called a lawyer when the deficiency list first arrived rather than several months later, the 60-day window on the entire $900,000 would still have been open, and a registered lien — not a trust claim built after the fact — would likely have secured a stronger settlement on the full amount, minus whatever genuine deficiencies existed. The lesson for her business going forward was straightforward: the lien clock on a single contract runs once, for the whole job, from substantial performance or completion — not phase by phase — so it has to be diarized and watched from the moment a certificate of substantial performance is published, not from the day a dispute begins. She has since built a simple internal calendar that flags that single deadline for every project, so a holdback dispute never again quietly runs past the point where the whole claim can be secured.

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