Not Paid for Construction Work in Ontario? Liens, Holdbacks and Legal Options

By Vinay Thapliyal, Barrister, Solicitor & Notary Public | Founder, Legal Route Professional Corporation

An unpaid construction invoice can leave your business covering wages, materials and supplier bills while waiting for money you expected to receive.

Whether you are a contractor, subcontractor or supplier, deciding how to respond involves more than sending another reminder. Your contract, project records and the reasons given for withholding payment all deserve attention.

Legal Route assists with Ontario construction disputes through its civil litigation services.

Understanding why payment is being withheld

Construction payment disputes can involve:

• Unpaid progress invoices or final accounts.
• Disagreements about extra work and change orders.
• Alleged deficiencies, delays or incomplete work.
• Deductions or backcharges.
• Holdback amounts that have not been released.

These issues require different assessments. A dispute about whether extra work was authorized is different from a disagreement about when a statutory holdback must be paid.

A legal review can identify the contractual basis for your claim, assess the other party’s position and help you decide whether negotiation or formal proceedings are appropriate.

Construction liens: an option that requires timely assessment

A construction lien may provide security for eligible unpaid services or materials supplied to an improvement. An unpaid invoice does not automatically establish lien entitlement.

Preserving and perfecting a lien are separate legal requirements. Sending an ordinary demand letter or continuing negotiations does not, by itself, preserve a lien.

Legal advice should address both whether a lien is available and what must happen to maintain that right.

Prompt payment: your place in the contracting chain matters

Where Ontario’s prompt-payment provisions apply, they establish payment and notice requirements. The rules governing an owner’s payment to a contractor differ from those governing payments to subcontractors.

The owner’s receipt of a “proper invoice” is central to the process. Invoice requirements, notices disputing payment and the applicable payment obligations need to be reviewed together. It would be misleading to assume every construction invoice becomes payable on the same timetable.

Holdbacks: distinguish money retained by law from an overdue invoice

A statutory holdback is money that must be retained under the Construction Act. Its release follows rules that differ from ordinary invoice payment.

Amendments effective January 1, 2026 introduced mandatory annual holdback-release requirements, subject to transitional rules. Earlier contracts and projects may be treated differently, and outstanding liens can affect release.

A review should establish which rules apply and when the particular holdback becomes payable. Neither “the work is finished” nor “we always release holdback at the end” settles that question on its own.

Could adjudication help resolve the dispute?

For qualifying construction disputes, adjudication provides a process in which an independent adjudicator makes a determination.

Unlike mediation, adjudication can produce a binding decision without a negotiated settlement. That determination remains binding unless displaced by a subsequent court or arbitration determination, or a written agreement between the parties.

Whether adjudication is available and suitable depends on the dispute and applicable requirements. It does not guarantee payment or replace assessment of other rights and deadlines.

Why timing deserves attention

Construction deadlines can be short, and the relevant starting point is not necessarily your invoice date. Project events, notices and the applicable statutory regime can matter.

Seek advice promptly when payment becomes disputed, work stops or a termination notice arrives. Waiting for informal promises of payment can leave less time to assess and protect available rights.

How Legal Route can assist

Our lawyers are licensed to practise law in Ontario. We assist clients in Brampton, Mississauga and across the GTA with construction and contractual disputes.

Depending on your matter, our work may include:

• Reviewing contracts, invoices, change orders and payment correspondence.
• Assessing disputed deductions, deficiencies and competing claims.
• Identifying relevant deadlines and available remedies.
• Communicating with the other party and negotiating payment or settlement terms.
• Handling appropriate lien or litigation steps within an agreed retainer.

We discuss the available options, costs and practical considerations—including whether pursuing a claim is proportionate to the amount at stake.

Frequently asked questions

Can a contractor refuse to pay me because the owner has not paid them?

That explanation does not settle the issue. Where prompt-payment rules apply, payment obligations and prescribed non-payment procedures must be assessed alongside the subcontract and project circumstances.

Can I stop work because I have not been paid?

Do not assume payment delay gives you an unrestricted right to suspend or terminate work. Obtain advice on your contract, any applicable statutory entitlement and required notices before deciding how to proceed.

What if my construction lien rights have expired?

Other legal remedies may still be available, including an otherwise valid contractual claim. Those remedies have their own requirements, deadlines and potential defences. Expiry of a lien should prompt a review of what options remain.

Discuss your construction payment dispute

Contact Legal Route to discuss your unpaid construction account and whether we can assist.

Phone: 905-283-8514
Email: info@legalroute.ca
Office by appointment: 2074 Steeles Ave E, Unit 17, Brampton, ON L6T 5A5

Initially provide your contact details, the names of the parties, the project location and a brief description of the payment issue. Mention any approaching dates or notices received. Please wait for our conflict-check and intake instructions before sending detailed confidential documents.

For a broader overview, read Someone Owes You Money in Ontario: Demand Letters, Settlement and Court Options.

Legal information disclaimer

This article provides general information about Ontario law, not legal advice for a particular matter. Your rights depend on the applicable law, contract, project circumstances and deadlines. Laws and procedures may change. Contacting Legal Route does not, by itself, establish a lawyer-client relationship or confirm that we have accepted your matter or responsibility for a deadline. Representation and its scope must be confirmed. No outcome is guaranteed.

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