Statutory holdback and holdback release
Statutory holdback is a percentage of each payment that a payer must retain rather than pay out. It exists to protect lien claimants further down the chain: if a subcontractor or supplier goes unpaid, the held-back fund is there to satisfy a valid lien.
Holdback is not the same as a payment dispute. It is a standing obligation that runs alongside the prompt-payment clock.
How much, and from what
The retention percentage is fixed by statute (commonly 10%) and is taken from each payment as the work proceeds. The held-back amount accumulates over the life of the contract.
How long it is held
Holdback is retained until the statutory holdback period has run, which is tied to substantial performance or completion and the expiry of the lien-filing window. Releasing holdback early can expose the payer to double payment if a valid lien is later filed.
Releasing holdback
Once the lien period has expired and no liens are outstanding, the holdback can be released. Some provinces also allow phased or annual release of accumulated holdback on longer projects. Tiercord tracks the holdback balance and the release date for each contract.
Holdback, by province
The model above is common to the provinces that have enacted prompt payment. The law, its status and the exact day-counts, citations and forms are provincial. Pick yours:
Frequently asked questions
How much holdback must I retain?
Manitoba sets the basic statutory holdback at 7.5%; most other provinces use 10% of the value of the work or materials, taken from each payment. Check your province's page for the exact figure and citation.
When can holdback be released?
After the statutory holdback period runs and the lien-filing window expires with no outstanding liens. Releasing it sooner risks having to pay twice.