Work out how much to hold back from a contractor's invoice under a provincial lien act and how much to pay now after deposits.
Several provinces' lien acts require an owner who pays a contractor to keep back a percentage of the value of work done, usually 10% (for example Ontario's Construction Act and British Columbia's Builders Lien Act), until the period for registering liens has passed without a lien being filed. Quebec has no statutory holdback; it uses the legal construction hypothec instead. See the holdback guide for the rules and deadlines.
Formula: amount kept back = invoice × holdback % + extra withheld for deficiencies; amount to pay now = invoice − amount kept back − payments already made.
Worked example (illustrative): a $16,000 roof invoice, 10% holdback, $500 held for missing drip edge on one side, and a $3,000 deposit already paid: kept back = $16,000 × 10% + $500 = $2,100; pay now = $16,000 − $2,100 − $3,000 = $10,900.
Limits: the holdback is calculated on the value of the work, so check how your province treats deposits and tax. Withholding money for deficiencies should follow your contract. Release the holdback only after the lien deadline has passed and you have checked title for liens; ask a lawyer if a lien appears.
Worked Estimates and Checklists
How the 10% holdback works under Ontario's Construction Act and BC's Builders Lien Act, Alberta's rules, Quebec's legal hypothec, deadlines and when to release payment.
