Holdback and retainage basics for project teams
The first progress payment on a $2.4 million school renovation in Ontario arrives 10 per cent short of the approved invoice. The new coordinator calls it an error; the project manager says it is holdback and comes back at the end. Neither can say which end, or what must happen first.
Ontario's and British Columbia's lien statutes call it holdback; US federal rules call it retainage. Either way, part of each payment is kept back and released later; the percentage, the dates and the release documents come from the law where the project is and from the contract.
Three examples, as of September 2026
- Ontario (Construction Act): each payer retains 10 per cent of the price of services and materials as supplied. Since 1 January 2026 the owner must release accrued holdback yearly: a notice within 14 days after each contract anniversary, then payment 60 to 74 days after the notice unless a preserved lien remains undischarged, and the contractor pays its subcontractors within 14 days of receiving it. Contracts signed before 2026 follow transition rules. The rest is paid within 14 days after liens expire; a contractor's lien expires 60 days after the certificate of substantial performance is published, or after completion, abandonment or termination if earlier.
- British Columbia (Builders Lien Act): each payer retains 10 per cent of the greater of the value of work and material provided and the payments made. The owner must keep it in a holdback account at a savings institution unless the work and material provided total less than $100,000 or the owner is the provincial government, a government corporation or a public body exempted by regulation. The payment certifier must decide within 10 days of a request whether the contract is complete; the holdback period ends 55 days after a certificate of completion is issued, and liens must be filed within 45 days of it.
- US federal contracts (Federal Acquisition Regulation): retainage is not automatic. The contracting officer may retain up to 10 per cent of a progress payment when progress is unsatisfactory, must release withheld funds at substantial completion except what is needed to protect the government, and pays retained amounts promptly on completion.
- Confirm which rules apply: province or state, public or private work, and your contract.
- Track holdback on every invoice, retained from you and by you.
- Diarize the release dates as soon as the contract is signed.
- Prepare the certificate application and release documents early.
- Pass holdback down on time, and forecast what you are owed and when.
Checklist
Find these for your job today
- The statute that governs its holdback
- The contract's holdback and release clauses
- The contract date and its anniversary
- Holdback retained from you and by you
- The expected date of the certificate
Check your understanding
Why does the certificate of substantial performance or completion matter so much?
Show the answer
It fixes the date the lien periods run from — publication in Ontario, issue in British Columbia — and the remaining holdback is released only after they end. Without it, they run from later or less certain events, such as completion. Applying as soon as the work qualifies gives everyone a firm date.
