Construction Lien Act - Release of Holdback

CHOP | Chapter 2.3.12 | pp 2

The architect prepares a certificate authorizing payment of the amount of holdback which has accrued to the date of substantial performance. The certificate should be dated for payment one day after the termination of the lien claim period. When issuing the release of the holdback certificate, the architect should advise the owner to ensure that no liens have been registered or notices of liens have been received. Typically, the owner will instruct his or her lawyer to undertake this determination. The architect should not perform this legal service; however, the architect should notify the owner that, if no liens exist, the holdback is payable on the date of the certificate. [...]

The holdback monies are a trust fund; this fund is not intended to enforce the performance of the contractor nor to ensure that deficiencies are corrected. Certification of payment for known deficiencies should never be made until the performance of the work is acceptable.[...]

The terms of CCDC 2 require the owner to place the holdback amount in a bank account (if a separate holdback account has not already been established), in the joint names of the owner and the contractor, ten days before the expiry of the holdback period. In some provinces, such as British Columbia, the lien legislation requires that the holdback monies be paid into a holdback trust account with each and every progress payment to the contractor.