Ontario Prompt Payment Law & Construction Liens: What Homeowners and Builders Need to Know
- Suzy Albornoz
- Jan 8
- 5 min read
Updated: Jan 16
If you’ve ever worked on, or paid for a construction project in Ontario, you’ve probably heard horror stories about delayed payments, trades not getting paid, or surprise liens showing up on a property.
That’s exactly why Ontario’s Prompt Payment and Adjudication rules exist.
Whether you’re a homeowner hiring a contractor, a builder managing multiple trades, or a subcontractor waiting to get paid, understanding how prompt payment and liens work can save you time, money, and serious stress.
Let’s break it down in plain language.
What Is Ontario’s Prompt Payment Law?
Ontario’s Prompt Payment rules are part of the Construction Act. They were introduced to fix a long-standing issue in the construction industry: slow or withheld payments.
The goal is simple: 👉🏼Work completed should be paid for — on time.
These rules create clear deadlines, define what a proper invoice is, and provide fast ways to resolve payment disputes.
Key Payment Timelines You Should Know
Here’s how the money is supposed to flow start to finish:
🧾 Owner → Contractor
The owner must pay a proper invoice within 28 days of receiving it.
🔨 Contractor → Subcontractor
The contractor must pay subs within 7 days of receiving payment from the owner.
If the contractor hasn’t been paid by the owner, payment to the sub is still due within 35 days of the proper invoice.
🛠️ Subcontractor → Sub-Subcontractor
Subs must pay sub-subs within 7 days of receiving payment.
If unpaid, payment is still required within 42 days of the proper invoice.
Important: These timelines are mandatory. You can’t contract out of them.
What Is a “Proper Invoice”?
A proper invoice is not just any bill — it has specific requirements under Ontario law.
A proper invoice must include:
Contractor’s name and address
Date of the invoice and period of work
Description of the work or services provided
Amount payable (including taxes)
Authority under the contract to submit the invoice
Once a proper invoice is received, the payment clock starts immediately.
💡 This protects homeowners too — it forces transparency and prevents surprise charges.
What Happens If Payment Is Late?
Notice of Non-Payment
If someone plans not to pay, they must formally say so — and fast.
Owner must issue a Notice of Non-Payment:
Within 14 days of receiving a proper invoice
Contractor must issue a Notice of Non-Payment:
Within 7 days of receiving payment (or the date payment was due)
The notice must clearly explain:
What work is being disputed
Why payment is not being made
⚠️ No notice = payment is still legally owed, even if there’s a disagreement later.
What Is Adjudication?
Adjudication is a fast-track dispute resolution process designed specifically for construction payment issues.
Instead of waiting months (or years) in court:
An independent adjudicator reviews the dispute
A binding decision is made quickly (often within weeks)
Cash flow keeps moving while disputes are resolved
This is especially helpful for:
Payment delays
Holdbacks
Change order disputes
Scope disagreements
Adjudication applies to both prime contracts and subcontracts.
Who Does Prompt Payment Apply To?
Prompt payment rules apply broadly across the construction industry, including:
Homeowners and developers
General contractors
Subcontractors and trades
Architects and engineers providing services related to construction
If the work falls under Ontario’s Construction Act, prompt payment likely applies.
How Construction Liens Fit Into This
A construction lien is a legal tool that protects contractors and trades who haven’t been paid for work done on a property.
If payment isn’t made:
A lien can be registered against the property
This can delay sales, refinancing, or further construction
It often forces resolution quickly
Prompt payment rules reduce the need for liens, but liens still exist as a last-line protection when payments break down.
What About Federal Projects?
For federally funded projects, the Federal Prompt Payment Act applies.
Under federal rules:
The Government of Canada must pay contractors within 28 days
Contractors must pay subcontractors within 7 days of receiving payment
The intent is the same: keep projects moving and cash flowing.
Why This Matters for Homeowners
Prompt payment laws aren’t just for contractors — they protect homeowners too.
They help ensure:
Clear, itemized billing
Fewer payment disputes
Less risk of liens due to unpaid trades
More professional, accountable project management
A contractor who understands and follows prompt payment rules is usually one who runs a tight, transparent operation.
Why This Matters for Builders & Trades
For builders and subcontractors, prompt payment:
Improves cash flow
Reduces financial risk
Creates leverage without jumping straight to legal action
Encourages professionalism across the project
Knowing your rights, and your obligations keeps everyone protected.
Final Takeaway
Ontario’s Prompt Payment and lien rules are about fairness, transparency, and accountability.
If you’re:
A homeowner → ask about proper invoices and payment timelines
A builder → know your notice obligations
A subcontractor → understand when payment is legally due
The more informed everyone is, the fewer disputes happen — and the smoother projects run.
A Real-World Note from CanMac Siding
At CanMac, we get it, construction isn’t always predictable. Sometimes unexpected issues come up, budgets shift, or questions need to be worked through before a final payment is made. That’s part of the business, and we’re always open to having those conversations.
What we ask for is simple: clear, honest communication.
If there’s a concern, a delay, or something that needs to be discussed, tell us. We’re reasonable, flexible, and solution-focused. We’d much rather talk it through than let things drag out unnecessarily.
What doesn’t work is the runaround — unanswered emails, changing stories, or silence once the work is complete. That approach doesn’t just delay payment, it shows a lack of respect for the time, effort, and craftsmanship that went into your project. And frankly, that’s a hard pill to swallow after delivering quality work in good faith.
Prompt payment laws exist to protect everyone involved, but good projects are built on mutual respect, accountability, and communication. When those things are in place, issues get resolved quickly and professionally.
That’s how we operate — and that’s what we expect in return.
Choose the Right Crew from Day One
The easiest way to avoid payment issues, delays, and unnecessary stress is simple: hire the right crew from the start.
At CanMac, we believe great projects are built on honesty, transparency, and mutual respect. We price fairly, communicate clearly, stand behind our craftsmanship, and treat every home as if it were our own — because for the families living there, it is.
We don’t cut corners, play games, or disappear when questions come up. We show up, do the work right, and have the conversations that matter — before, during, and after the job.
If you’re looking for a contractor who values quality workmanship, clear expectations, and a professional process from start to finish, start with the CanMac crew.
📞 Because doing it right the first time saves you time, money, and frustration in the long run.
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