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This may sound like a stupid question, but can someone explain the Mechanix Lean Act to me? (I know there’s a few people from Ontario here…). All I know is that someone can hold back 10% for 45 days until the lien period is over, after which time the customer can’t be held liable for unpaid subs and supplier. But, if it’s deducted from a draw, is it due 45 days from the due date of the draw, or 45 days after final completion and all deficiencies? Also, I heard you can’t hold back 10% of an initial deposit? Labour-only contracts are exempt? Is there a minimum value of a job under which holdbacks can’t be applied? Can interest be charged on money being held back? What about providing a waiver of liens instead of letting the customer hold on to the money? I’d like to figure all this out once and for all. If someone wanted to avoid paying that 10%, they could just come up with a new defect that needs fixing every 45 days, thereby restarting the holdback.
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Ross
That's quite a mouthfull but here goes.
(Depending on the terms of your contract)
Normally, 10% is held in trust, deducted from every draw, due 45 days after substantial completion. The release of the holdback is subject to conditions. Normally requires valid WCB clearance certificate and a Statutory Declaration, is a sworn statement that all your subs and suppliers have been paid by you.
The passage of 45 days somewhat guarantees the owner/mortgage holder that lien rights have expired. (But does not and I repeat does not guarantee that claims cannot be made against the owner/mortgage holder)
You can hold back, subject to the terms of your contract, 10% on the initial payment.
Generally, (not labour only contracts) only supply contracts can be exempted from holdbacks, but not always.
Not aware of any minimums for holdbacks.
The issue of interest can be covered in contracts, but it would be a nominal amount if any.
Waivers are not acceptable by the mortgage holders as a rule, the only exception is if you post a bond for the full value of the work done.
Holdback cannot be held back for deficiencies, only the dollar value of the deficiency can be witheld.
If the dollar value of your holdback is causing you concern and you think that you're about to be stiffed, lien immediately, BEFORE the 45 days are up.
Ross, if your in S---, Email me for my phone number, and I'll try to help you out...