Ready-for-Takeover vs Substantial Performance

An Ontario project on CCDC 2-2020 has two "done" dates, and they come from two different places. Substantial Performance is a statutory test in the Construction Act that starts the lien and holdback clocks. Ready-for-Takeover is a contract milestone that decides whether the contractor finished on time. Owners who treat them as the same date lose money on one side or leverage on the other.

Learning outcomes

• Apply the section 2 test for substantial performance under Ontario's Construction Act, including the cost-to-complete thresholds.
• Explain how a certificate of substantial performance is issued and published under section 32, and what publication starts.
• List the Ready-for-Takeover prerequisites in CCDC 2-2020 GC 12.1 and the Consultant's review timing.
• Plan both milestones for Northgate's M9 date, Friday January 14, 2028, including what happens if they separate.

The lesson

Two milestones, two sources of law

Substantial Performance belongs to the statute. In Ontario it is defined in section 2 of the Construction Act, R.S.O. 1990, c. C.30, and no contract can change the test. Ready-for-Takeover belongs to the contract. It was introduced in CCDC 2-2020, as lesson 6 explained, and the parties can adjust it through Supplementary Conditions. CCDC 2-2020 makes Substantial Performance the first prerequisite of Ready-for-Takeover, so Ready-for-Takeover can never come first. It can come on the same day, or later.

The statutory test: section 2

Under section 2(1) of the Construction Act, a contract is substantially performed when two things are true. First, the improvement, or a substantial part of it, is "ready for use or is being used for the purposes intended". Second, it can be completed, or known defects corrected, for no more than a set amount: 3% of the first $1,000,000 of the contract price, 2% of the next $1,000,000, and 1% of the balance. These tiers have applied since the October 2019 amendments.

Two other rules sit in the same section. Under section 2(2), if the improvement is ready for use but the owner and contractor agree that some work will not be finished promptly, the value of that work is deducted from the contract price before the test is applied. Under section 2(3), a contract is deemed completed when the remaining cost to finish, correct a known defect or make the last supply is no more than the lesser of 1% of the contract price and $5,000. Completion matters because it starts the lien period for work done after substantial performance.

Notice what the test does not ask. It does not require an occupancy permit, operating manuals, training or a clean building. A warehouse can pass section 2 with a long deficiency list and no permission to occupy, as long as it is usable for its purpose and the list is cheap enough.

Certificate and publication: section 32

Section 32 sets the procedure. The contractor applies to the payment certifier, which on a CCDC 2 project is normally the Consultant. If there is no payment certifier, the owner and contractor decide together. The payment certifier determines whether the contract is substantially performed and, if it is, signs a certificate in the prescribed form showing the date of substantial performance. It must give copies to the owner and contractor within seven days of signing.

The contractor then publishes the certificate. If it has not done so within seven days of receiving it, any person may publish it. Publication is not a formality: a certificate has no effect until it is published. Since January 1, 2026, the regulation designates Daily Commercial News, Link2Build and Ontario Construction News for publishing statutory notices. If the payment certifier refuses unreasonably, a court can make a declaration of substantial performance, and section 32(3) makes a person who unreasonably refuses to certify liable for resulting damages.

What publication starts

Under section 31(2), liens for work supplied up to substantial performance expire 60 days after the earlier of publication of the certificate and completion, abandonment or termination of the contract. Once that period passes with no lien preserved, the owner releases the basic holdback that remains (section 26). Work done after substantial performance carries its own 10% holdback under section 22(2), and its lien period runs from completion.

The 2026 amendments added a twist. Contracts entered into on or after January 1, 2026 must release accrued holdback annually: the owner publishes a notice within 14 days after each contract anniversary and pays 60 to 74 days later unless liens are preserved. The old notice of non-payment of holdback was repealed. Substantial performance still releases the remaining balance.

The contract test: Ready-for-Takeover under GC 12.1

GC 12.1.1 lists the Ready-for-Takeover prerequisites shown in Figure 1. The contractor applies in writing to both the Owner and the Consultant, with a list of items still to be completed or corrected. The Consultant has 10 days from receipt to confirm the date in writing or to say, with reasons, why the Work is not ready. Under GC 12.1.2, a prerequisite delayed by causes beyond the contractor's reasonable control, or by agreement, does not hold Ready-for-Takeover back. The parties then set a reasonable date to finish the listed items.

Ready-for-Takeover is where the contract's money and risk turn over. Contract Time is met. The warranty in GC 12.3 starts. Insurance under GC 11.1 runs to it, and the indemnity and waiver periods in GC 13 are counted from it. If the owner needs to move in earlier, GC 12.2 allows early occupancy of all or part of the Work, with the contractor's agreement (not unreasonably withheld) and approval of the authorities having jurisdiction. The occupied part is treated as taken over, care of it passes to the owner and its warranty starts on occupancy.

Northgate worked example

Northgate Distribution Centre (fictional) is a 12,000 m² tilt-up warehouse in Vaughan for Northgate Logistics Inc. (fictional). The CCDC 2-2020 contract with Halvorsen Builders Ltd. (fictional) is $34,950,000 excluding HST, and Ridgeline Architects Inc. (fictional) is the Consultant and payment certifier. The owner's master schedule targets both milestones on the same day: M9, Friday January 14, 2028. The owner's separate racking contractor starts on Monday January 17, 2028 (M10). See the Northgate fact sheet.

How much can be left at substantial performance?

Figure 2 applies the section 2(1) tiers to the original Contract Price. On approved changes the figure moves; the owner's representative should recalculate it on the current price when Halvorsen applies.

View the data

Tier	Price in tier	Rate	Amount
First	$1,000,000	3%	$30,000
Next	$1,000,000	2%	$20,000
Balance	$32,950,000	1%	$329,500
Total limit for substantial performance	$34,950,000		$379,500
Deemed completion limit, s. 2(3)		lesser of 1% and $5,000	$5,000

So when Halvorsen applies, Ridgeline needs a priced list of incomplete and defective work. If the list is worth more than $379,500, the contract is not substantially performed, however close the building looks.

The planned sequence

Figure 3 shows the owner's plan if everything goes well. Halvorsen applies for both milestones on Monday January 10, 2028. Ridgeline inspects, signs the certificate dated January 14 and confirms Ready-for-Takeover the same day, inside its 10-day window, which would have closed on Thursday January 20. Halvorsen publishes the certificate on Tuesday January 18.

View the data

Date	Event	Rule
Mon Jan 10, 2028	Halvorsen applies for the certificate and Ready-for-Takeover	s. 32; GC 12.1
Fri Jan 14, 2028	M9: substantial performance certified; Ready-for-Takeover confirmed	s. 2; GC 12.1
Mon Jan 17, 2028	M10: owner's racking installation starts	Owner's separate contract
Tue Jan 18, 2028	Certificate published	s. 32
Sat Mar 18, 2028	Lien period for work to substantial performance expires	s. 31(2)
Mon Mar 20, 2028	Remaining basic holdback paid if no liens preserved	s. 26
Fri Mar 31, 2028	M11: final completion	s. 2(3)
Tue May 30, 2028	Lien period for work after substantial performance expires	s. 31(2)
Sun Jan 14, 2029	One-year warranty ends	GC 12.3

The holdback at stake is large. At 10% of the Contract Price, the full holdback is $3,495,000 before changes. Because the contract was signed on January 11, 2027, after the 2026 amendments, the first annual-release anniversary is Tuesday January 11, 2028, three days before M9. The owner's lawyer has to decide how the annual-release notice and the substantial performance release will run together so the owner neither pays twice nor misses a deadline.

What if the milestones separate?

Suppose the building passes section 2 on January 14 but the City of Vaughan has not yet accepted the ESFR sprinkler system, so the occupancy prerequisite fails. Ridgeline can certify substantial performance, and the lien clock starts. But Ridgeline must refuse Ready-for-Takeover, with reasons, and Halvorsen is late unless the delay is beyond its reasonable control under GC 12.1.2. The owner's racking start on January 17 is now at risk. The owner can ask for early occupancy of the warehouse under GC 12.2, but only with the City's approval, and the occupied area's warranty and care pass to the owner from that day.

Owner's move

• Plan two milestones in the schedule. Show Substantial Performance and Ready-for-Takeover as separate milestones, even if planned for the same day, with the RFT prerequisites as predecessor activities.
• Price the deficiency list early. Ask for a priced list a month before the application so the section 2 threshold is never a surprise.
• Track publication, not signature. The lien period runs from publication. Get a copy of the published notice and diarize 60 days from it.
• Run a lien search before releasing holdback. Pay promptly when the period ends, but only after the search.
• Decide early occupancy before you need it. If racking cannot wait, agree the terms and get the City's approval in advance.

Common mistakes

1. Treating the signed certificate as effective. Until it is published, it does nothing.
2. Measuring liquidated damages from substantial performance. Under CCDC 2-2020, the contractor is on time only at Ready-for-Takeover.
3. Letting the Consultant's 10 days lapse. The Consultant must confirm or give written reasons; silence invites a dispute.
4. Moving in without GC 12.2 terms. Informal occupancy blurs who has care of the Work and when the warranty starts.
5. Forgetting the second lien period. Work done after substantial performance has its own holdback and its own clock.

Quick quiz

1. Northgate's remaining and corrective work is priced at $420,000 on a $34,950,000 contract. Is the contract substantially performed under section 2(1)?

   1. Yes, it is under 3% of the price
   2. No, it exceeds the $379,500 limit
   3. Yes, if the Consultant agrees
   4. Only if the owner has moved in

2. When does a certificate of substantial performance take effect?

   1. When the payment certifier signs it
   2. When copies reach the owner and contractor
   3. When it is published
   4. Sixty days after signing

3. Who normally publishes the certificate first?

   1. The owner
   2. The contractor
   3. The City
   4. The lender

4. How long does the Consultant have to respond to a Ready-for-Takeover application under GC 12.1?

   1. 5 days
   2. 7 days
   3. 10 days
   4. 28 days

5. Which of these is a Ready-for-Takeover prerequisite but not part of the section 2 test?

   1. The building is ready for its intended use
   2. Cost to complete is under the threshold
   3. Occupancy requirements are met
   4. A payment certifier exists

Show answers and explanations

1. B. The tiers give $30,000 + $20,000 + $329,500 = $379,500. At $420,000, the test fails.
2. C. Section 32 says the certificate has no effect until it is published.
3. B. The contractor publishes; if it does not within seven days of receiving it, any person may.
4. C. The Consultant has 10 days to confirm the date or give written reasons why the Work is not ready.
5. C. Occupancy is a contract prerequisite in GC 12.1; the statute only asks about use and cost to complete.

Key terms

Substantial performance

The Construction Act, s. 2 milestone: the improvement is usable for its purpose and can be finished within the cost thresholds.

Payment certifier

The architect, engineer or other person whose certificate triggers payment under the contract; on CCDC 2, normally the Consultant.

Certificate of substantial performance

The prescribed form signed under s. 32, effective only once published.

Construction trade newspaper

A publication designated for statutory notices; currently Daily Commercial News, Link2Build and Ontario Construction News.

Lien period

The 60 days after publication or completion during which a lien must be preserved, under s. 31.

Deemed completion

Under s. 2(3), completion when the remaining cost is no more than the lesser of 1% of the price and $5,000.

Ready-for-Takeover

The CCDC 2-2020 GC 12.1 milestone: substantial performance plus occupancy, cleaning, documents, testing and access.

References

1. Government of Ontario, Construction Act, R.S.O. 1990, c. C.30, ss. 2, 22, 26, 31 and 32 (e-Laws).
2. Consolidated Construction Act, industry-hosted consolidation (used to read ss. 2, 22, 26, 31 and 32; check against e-Laws).
3. Ontario Association of Architects, Certifying substantial performance (2020).
4. Gowling WLG, What the new CCDC 2 stipulated price contract means for you (December 2020).
5. Torkin Manes LLP, Canadian construction contracts: welcome to the new CCDC 2 (2020) (February 2021).
6. Fasken, Ontario's amendments to the Construction Act take effect January 1, 2026 (December 2025).
7. DLA Piper, Critical amendments to Ontario Construction Act have arrived (January 2026).
8. Miller Thomson LLP, Substantial performance: what you need to know (November 2019).

Verified on November 4, 2026.

Next lesson in this trackCCDC 3 cost-plus: controlling the Cost of the Work