How much 10% holdback should sit in trust during my Toronto reno?

The 10% holdback required under Ontario's Construction Act must be retained on every payment certificate until the holdback release period expires — so if your total contract is $100,000, you'd hold back $10,000 in trust throughout the project.

This isn't optional or negotiable — it's a statutory requirement under the Ontario Construction Act (formerly the Construction Lien Act), and it exists specifically to protect subcontractors, suppliers, and workers who might not be paid by your general contractor. As a homeowner (the "owner" under the Act), you are legally responsible for maintaining this holdback.

Here's how the math works in practice: on every draw or progress payment you make to your contractor, you withhold 10% of that amount. If your contractor submits a $30,000 progress draw, you pay $27,000 and retain $3,000. These retained amounts accumulate throughout the project. By the time your $100,000 reno is complete, you've paid out $90,000 and are sitting on $10,000 in holdback.

When Can You Release the Holdback?

The basic holdback can be released 45 days after the contract is "certified complete" — meaning a Certificate of Substantial Performance has been published in a construction publication (typically the Daily Commercial News), and no liens have been registered against your property during that 45-day window. If a lien is registered, you must not release the holdback until the lien is resolved, either by the contractor posting a bond or by court order.

Substantial performance under the Act means the project is ready for its intended use or is capable of completion at a cost of no more than 3% of the first $500,000 of the contract price (with a sliding scale above that). It does not mean 100% complete — which surprises many homeowners.

Toronto-Specific Considerations

For larger renovations in Toronto — think full basement finishes, additions, or whole-home renovations in the $150,000–$500,000+ range — this holdback math becomes significant. On a $300,000 project, you're holding $30,000 in trust. Some homeowners set up a dedicated account for this purpose, which is good practice. You are not required to hold it in a formal trust account as a residential owner, but keeping it clearly segregated protects you if a dispute arises.

For smaller projects under roughly $20,000, the lien exposure is lower, but the holdback obligation still technically applies. Many homeowners on small jobs negotiate final payment structures informally — just understand you're taking on some risk if you pay in full before the lien period clears.

What You Should Do

Consult a construction lawyer before signing any contract over $50,000 — many Toronto firms offer a one-hour review for $300–$500 that can save you from significant liability. Make sure your contract clearly defines the payment schedule, substantial performance milestones, and how the holdback will be handled. Never release holdback early under pressure from a contractor — that's one of the most common ways homeowners end up paying twice when a subcontractor files a lien.

You can find licensed, reputable contractors through the Toronto Construction Network directory — working with established professionals reduces (but doesn't eliminate) lien risk significantly.