How do progress draws work under the Construction Act in Ontario?

If you are a contractor or a subcontractor working on a construction project in Ontario, it is essential to know your rights and obligations regarding progress draws under the Construction Act. Progress draws are an important part of construction financing, and understanding how they work can help ensure that you get paid on time for the work you’ve completed.

Under the Construction Act, progress draws are payments made to contractors and subcontractors for work completed up to a certain point in a construction project. Progress draws are typically made on a monthly basis, but can also be made based on specific milestones or stages of completion.

To be eligible for progress draws, contractors and subcontractors must provide a written request for payment, including a statement of the work completed, the amount requested, and any other information required by the construction contract. The request must be made in accordance with the terms of the construction contract and any applicable legislation.

Once the request for payment has been received, the owner or the party responsible for making the progress draw must either pay the amount requested or provide a written notice of non-payment within a specified time period. Failure to provide a notice of non-payment can result in liability for the full amount requested.

If a notice of non-payment is provided, the contractor or subcontractor has the right to dispute the non-payment and seek resolution through the dispute resolution process outlined in the Construction Act. This may include mediation, adjudication, or court proceedings.

It is important to note that progress draws are subject to holdback requirements under the Construction Act. A holdback is a portion of the progress draw that is retained by the owner or the party responsible for making the payment to ensure that all parties are paid in full and that any liens or claims against the property are satisfied.

If you are a contractor or subcontractor working on a construction project in Ontario and have questions or concerns about progress draws, it is recommended that you consult with a construction financing lawyer. At Falcon Law PC, our experienced lawyers can provide you with guidance and representation throughout the construction financing process. Contact us at 1-877-892-7778 or to schedule a free consultation today.

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