Substantial Performance in Ontario Construction Projects

Substantial performance is a defined concept under Ontario’s Construction Act, not just an informal sense that a project is “mostly done.” It generally refers to the point at which the work under a contract — or a defined part of it — is far enough along that the owner can use the improvement for its intended purpose, with only minor items left outstanding. Those outstanding items are typically small finishing touches or minor deficiencies, not anything that would prevent normal use of the space.

It is worth distinguishing substantial performance from full completion. Completion refers to the point at which all of the work, including those remaining minor items, is actually finished. Both milestones matter under the Construction Act, and each triggers its own set of deadlines and holdback consequences, which is why the distinction is more than a matter of wording.

The concept exists because construction projects rarely finish in one clean step. A new building might be ready for an owner to move in and start operating while a handful of finishing touches — a touch-up of paint, a piece of trim, a final inspection sign-off on a minor system — are still outstanding. Treating that kind of project as entirely unfinished until every last item is done would delay payment and lien timelines well past the point where the project is actually serving its purpose, which is the practical problem the substantial performance concept is designed to solve.

On larger or more formally structured projects, a payment certifier or consultant named in the contract — often an architect or engineer — is typically responsible for assessing whether the statutory test for substantial performance has been met and issuing a certificate confirming it. On smaller projects, including many residential renovations, there is often no named certifier, in which case the owner generally makes this determination, sometimes with input from the contractor, applying the same statutory test.

The assessment generally focuses on whether the project can be used for the purpose it was intended for, with the value of any remaining work weighed against the overall contract price. A project with extensive work still outstanding, or with issues that genuinely prevent normal use, has likely not reached substantial performance under the Act, regardless of how the parties might informally describe it.

Because the determination carries real financial consequences for everyone on the project, it is not simply a matter of the owner or certifier declaring the project finished enough. The statutory test looks at concrete factors, including the proportion of the contract price represented by any outstanding work, so a certificate issued on flimsy grounds can later be challenged by a contractor or subcontractor whose lien deadlines were affected by it.

Publishing a certificate of substantial performance is far more than a formality — it is the event that starts statutory lien preservation deadlines running for everyone connected to the relevant scope of work. Under the Construction Act, those involved generally have 60 days from the publication date to preserve a lien connected to that portion of the project, and a further 90 days after that to perfect it.

Because the publication date carries so much weight, confirming whether — and when — a certificate was actually published is often one of the first things worth checking when a question arises about lien deadlines on a project nearing the end of its work.

This matters just as much for parties who were not directly involved in determining substantial performance. A subcontractor or supplier whose own work wrapped up weeks or months earlier can still find its lien deadline tied to a publication date set by a certifier assessing the project as a whole, which is one reason it is worth checking in on this milestone periodically as a project nears its end, rather than assuming a personal completion date is the only clock running.

The Construction Act requires that a certificate of substantial performance be published in a construction trade newspaper that meets the Act’s specific criteria for this purpose. This creates a dateable, public record that lien deadlines can be measured against, rather than relying on private correspondence between the parties, which could otherwise create disputes about exactly when notice was given.

In practice, copies of a published certificate are also typically made available by the payment certifier, consultant, owner, or general contractor responsible for the project, so a contractor or subcontractor wanting to confirm the date can usually request it directly rather than relying only on the trade publication itself.

For a project without a formal certifier, the parties may still need to document that substantial performance was reached and when, even without going through the formal trade publication process in every case. Clear written confirmation between the owner and contractor of the date the project became ready for use can help avoid later disagreement over when the relevant deadlines actually began to run.

Substantial performance also connects directly to holdback. Once the lien preservation period following publication of the certificate has passed without liens being preserved against the relevant holdback — or once any liens that were preserved have been dealt with — the basic holdback tied to the substantially performed work generally becomes eligible for release to the contractor.

Any separate holdback tied to finishing the remaining minor items, sometimes called finishing holdback, generally stays tied to full completion of that remaining work rather than to the substantial performance date. This two-stage structure is part of why substantial performance and completion are tracked as distinct milestones rather than a single event. Our guide to holdback requirements in Ontario walks through the release mechanics in more depth.

In practice, this means a contractor can generally expect two separate payment events after a project wraps up: the basic holdback becoming available once the lien preservation window tied to substantial performance closes, and the finishing holdback becoming available only once the last outstanding items are actually completed to the owner’s satisfaction. Treating these as one combined release date is a common source of confusion between owners and contractors near the end of a project.

For anyone involved in a project approaching its final stages — owners, general contractors, and subcontractors alike — it is generally worth confirming directly with the payment certifier, consultant, or owner whether a certificate of substantial performance has been issued, and if so, when it was or will be published. That date becomes the reference point for lien deadlines and holdback release that follow.

Where a dispute arises over the timing or accuracy of a substantial performance determination, our guides to construction adjudication in Ontario and construction liens explain the processes available to address it. This article is general information about how substantial performance generally works under Ontario’s Construction Act, not legal advice for a specific project — our contact page can help point toward further resources.