Holdback
A holdback is a portion of each progress payment that an owner is required to retain for a set period, protecting against liens from unpaid subcontractors and suppliers.
Also known as: Construction holdback · Lien holdback · Retainage (US)
Holdback is the Canadian mechanism that sits between a contractor finishing work and being paid for all of it. On each progress claim, the owner keeps back a percentage — commonly 10%, though the figure and the rules are set by each province's construction or builders' lien legislation — and releases it after a defined period has passed without a lien being registered.
For the contractor, the practical consequence is cash flow. A job billed to 100% is not a job paid to 100%, and the holdback on a large project can be the difference between a comfortable quarter and a tight one. Tracking it per project, rather than discovering it at closeout, is the whole discipline.
The related trap is billing the holdback twice: once implicitly across progress claims and again as a release at the end. Progress billing that treats holdback as its own line, released once, avoids it.
In Canada vs the United States
The American equivalent is retainage, which is contractual rather than statutory in most states — the parties negotiate it. In Canada it is legislated, the percentage and the release period come from your province's act, and they differ between provinces. Check the legislation that applies to your work; this is a general description, not legal advice.
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