Part of the Ontario construction contracts guide for owners.
Substantial performance is the most important date on an Ontario construction project that most owners never see coming. It isn't the day the keys are handed over, and it isn't the day the last deficiency is fixed. It's a statutory test, certified on a prescribed form and published in a trade newspaper, and it starts the clock on lien rights, holdback release and a string of contractual obligations.
This guide explains the test under the Construction Act, who certifies it, why publication matters, what happens to holdback afterwards, and how the CCDC 2 (2020) milestone of Ready-for-Takeover fits alongside it.
The statutory test
Under subsection 2(1) of the Act, a contract is substantially performed when two things are true:
- The improvement, or a substantial part of it, is ready for use or is being used for its intended purposes.
- The remaining work, including correction of known defects, can be completed for no more than a sliding-scale amount: 3% of the first $1,000,000 of the contract price, 2% of the next $1,000,000, and 1% of the balance.
The percentages fall as the contract grows. On a $1,000,000 contract, the work must be 97% done. On a $3,000,000 contract, the threshold is $60,000. On an $8,000,000 contract, it's $110,000, or less than 1.4% of the price. On a large project, "substantially performed" is closer to finished than many owners assume.
View the data
| Contract price | Maximum remaining work | Share of price |
|---|---|---|
| $1,000,000 | $30,000 | 3.00% |
| $3,000,000 | $60,000 | 2.00% |
| $8,000,000 | $110,000 | 1.38% |
| $20,000,000 | $230,000 | 1.15% |
Two related rules matter. Under subsection 2(2), where completion is delayed for reasons beyond the contractor's control, or the parties agree not to finish the work promptly, the cost of that remaining work is deducted from the contract price for the purpose of the calculation. And under subsection 2(3), a contract is deemed complete when the remaining work is worth no more than the lesser of 1% of the contract price or $5,000. Completion matters when there's no certificate, because it also starts the lien clock.
Who certifies, and how
If the contract names a payment certifier, usually the architect or prime consultant, that person determines whether the contract has been substantially performed and signs the certificate. If there's no payment certifier, the owner and contractor make the determination jointly and both sign. The certificate uses the prescribed form (Form 9) and must state the date on which the contract was substantially performed.
The Ontario Association of Architects advises that an architect who hasn't been the payment certifier from the first payment application shouldn't take on the role partway through to certify substantial performance, because concealed work and earlier changes can no longer be properly assessed. If your consultant's role is unclear, sort it out long before the contractor applies.
The certifier needs current numbers to do the test properly: the contract price including approved changes, and an itemized estimate of what's left, usually based on the schedule of values. Pending change orders and an unpriced deficiency list make the calculation harder, and arguments about the date often trace back to that.
The certificate also has to be accurate. In Vestacon Ltd. v. ARC Productions Ltd. (2018 ONSC 5366), three certificates were declared invalid for not including a proper legal description of the property. The court still refused to invalidate the lien because the claimant wasn't prejudiced, but the episode shows how much depends on the paperwork.
Publication: the step that makes it count
A signed certificate of substantial performance has no effect until it's published in a construction trade newspaper. Since 2019, that includes qualifying electronic publications, not only the printed Daily Commercial News. The newspaper must publish at least daily except Saturdays and holidays, customarily carry calls for tender, and be primarily devoted to construction.
Publication is what tells subcontractors and suppliers down the chain that the 60-day window to preserve their liens has started. Until the certificate is published, that clock hasn't started from substantial performance, which means the holdback clock hasn't either. On projects we've supported, a certificate signed and left in a file for weeks has been one of the most common, and most avoidable, causes of late holdback release.
What follows: lien expiry and holdback
Once the certificate is published, sub-trades and the contractor have 60 days to preserve any liens. Basic holdback for the work certified must be released once all liens that could be claimed against it have expired or been satisfied, discharged or otherwise resolved. If nothing has been registered by the end of the lien period, the holdback becomes payable.
CCDC 2 (2020) layers contract terms on top of the statute:
- The Consultant has 20 calendar days after receiving the contractor's application to either certify the date of substantial performance or explain in writing why the work isn't there yet (GC 5.4.1).
- If holdback hasn't been kept in a separate account, the owner must place it in a joint bank account with the contractor no later than 10 calendar days before the holdback period expires (GC 5.4.2).
- Subject to payment legislation, holdback is due no later than 10 Working Days after the holdback period expires (GC 5.4.3).
Work done after substantial performance has its own 10% finishing holdback, released on the same logic once the lien period for that later work has passed. And from January 1, 2026, owners must also release accrued holdback on each anniversary of the contract, so on longer projects much of the holdback may already have been paid before substantial performance. Our guide to holdback and the new annual release rules covers that process.
Ready-for-Takeover is a different milestone
CCDC 2 (2020) introduced Ready-for-Takeover as a purely contractual milestone. It comes after substantial performance and before the work is complete. It doesn't change the Construction Act: substantial performance still governs lien periods and holdback. But Ready-for-Takeover now carries many of the obligations that used to run from substantial performance.
The prerequisites are limited to the eight listed in GC 12.1.1:
- the Consultant has certified or verified substantial performance;
- evidence of compliance with occupancy requirements or an occupancy permit;
- final cleaning and waste removal;
- delivery of the operations and maintenance documents needed for immediate operation;
- as-built drawings completed to date available on site;
- start-up and testing needed for immediate occupancy;
- secure access to the work provided to the owner, if required;
- demonstration and training scheduled.
Some of these (final cleaning, O&M documents, as-builts and start-up testing) can be deferred without delaying Ready-for-Takeover where conditions are beyond the contractor's control or the parties agree. The contractor applies with a list of items still to complete, and the Consultant has 10 calendar days to confirm the date or give reasons.
View the data
| Track | Step | Timing |
|---|---|---|
| Statute | Certifier decides on substantial performance | Within 20 calendar days (CCDC 2 GC 5.4.1) |
| Statute | Certificate published | Required before it has effect |
| Statute | Lien period | 60 days from publication |
| Statute | Holdback payable | Within 10 Working Days after lien period (CCDC 2 GC 5.4.3) |
| Contract | Consultant decides on Ready-for-Takeover | Within 10 calendar days (GC 12.1.4) |
| Contract | Warranty, insurance and claim periods | Run from Ready-for-Takeover |
For owners, the date matters because the contract time is now measured to Ready-for-Takeover, and the one-year warranty, the end of the contractor's insurance obligations, and the time limits on indemnity and waiver of claims all run from it. Adding prerequisites, such as full commissioning or specific turnover documents, requires a supplementary condition.
Practical consequences for owners
- Substantial performance can arrive before the building is usable for you. The test asks whether it's ready for its intended use, not whether your fit-out, IT or furniture is in. Plan owner work so that the statutory date doesn't surprise your operations team.
- The date moves money. Holdback and lien periods follow it. A disputed date is a disputed payment date.
- Early occupancy has a price. Under CCDC 2 (2020), the owner can occupy part or all of the work before Ready-for-Takeover if the contractor agrees and the authorities approve. But the occupied part is treated as taken over: its warranty starts on the occupancy date and the contractor is no longer responsible for its care. Moving a store team in early to stock shelves can quietly shorten your warranty.
- Takeover is where owners have leverage. Once Ready-for-Takeover is confirmed, the warranty starts. Make sure the prerequisites you care about are written into the contract before tender.
What owners should do
- Confirm the payment certifier at the start. Name them in the contract and make sure they certify from the first application.
- Keep the cost-to-complete current. Ask for an updated schedule of values and priced deficiency list in the months before the expected date, so the 3-2-1 test can be done on real numbers.
- Publish promptly and keep proof. Agree who publishes the certificate and when, and file the publication record with the certificate.
- Calendar the lien period and the holdback payment date. Check title before releasing holdback, and plan the joint account if CCDC 2 GC 5.4.2 applies.
- Review the Ready-for-Takeover prerequisites before tendering. If commissioning or specific turnover documents matter, add them by supplementary condition with legal advice.
The bottom line
Substantial performance is a legal test with a financial trigger attached. Owners who understand the calculation, control the certificate and publish on time get predictable holdback release and fewer arguments. Owners who treat it as an architect's formality usually find out what it means when a lien period has already run, or hasn't.
Approaching substantial performance and want an independent check on the cost-to-complete, the certificate and the takeover list? Book a 30-minute call with Benjamin R. Consulting.
Sources: Ontario Association of Architects, When Can Architects Not Certify Substantial Performance; OAA Practice Tip PT.23.11, CCDC 2 (2020) Overview of Changes (2024); Osler, Introducing CCDC 2 2020 (2021); CCDC 2 (2020) Stipulated Price Contract, GC 5.4 and GC 12.1 (copy published with a public tender); Mann Lawyers, Construction Act: Completion or Substantial Performance Date; Miller Thomson, Substantial Performance: What You Need to Know (2019); Goodmans, New Requirements for Publishing Certificates of Substantial Performance (2019); Link2Build Ontario, A Layperson's Guide to the Construction Act (2019); Ontario Bar Association, Key 2026 Amendments (2026). Threshold examples are illustrative. This article is general information, not legal advice. Get legal advice on your contract and specific circumstances.