Lien Holdback


  • Provides a form of security to contractors, subcontractors, workers and suppliers who work on a building that is under construction. Creates a pool of money out of which claims may be paid by requiring an owner to hold back 10 to 15 percent of loan monies advanced on new construction, typically for a time period equal to the statutory period in the Builders' / Mechanics' Lien Act for the registration of lien claims. The time for retaining the holdback is usually between 40 to 55 days and varies from province to province.

builders lien holdback, construction lien holdback, contractor lien holdback

Related Terms and Acronyms

  • First Lien Definition,
    • Primary claim by the lender for satisfaction of outstanding debt. A first mortgage creates a first lien.
  • Holdback Definition,
    • A dollar amount that is withheld by the lender during construction of a home to ensure construction is satisfactory at every stage. The amount of hold-back is typically equivalent to the estimated cost to complete the construction.
  • Land Draw Definition,
    • A construction loan backed by the value of the land.
  • Lien Definition,
    • A legal hold or claim of a creditor on the property of another.
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