How does the holdback work when paying a contractor in BC?

In BC, the Builders Lien Act requires homeowners to hold back 10% of every progress payment made to a contractor, and keep that holdback for 55 days after the work is substantially completed. This is a legal requirement — not optional — and it protects both you and any subtrades or suppliers who worked on your project.

Here's how it works in practice. Say you hire a general contractor for a $100,000 renovation and they invoice you $30,000 for the first phase of work. You pay $27,000 and hold back $3,000 (10%). This continues with every draw throughout the project. The holdback money sits in your hands — you don't put it in a special account, but you must not release it early. Once the project reaches substantial completion (not necessarily 100% done — typically when the work is usable for its intended purpose), the 55-day clock starts.

Why 55 days? That's the window during which subtrades, suppliers, and workers who haven't been paid by your GC can file a builders lien against your property. If a drywall subcontractor or lumber supplier didn't get paid, they can register a lien on your title through the BC Land Title Office — even though you paid your GC in full. The holdback is your financial buffer against exactly this scenario. After 55 days with no liens filed, you can safely release the holdback to your contractor.

Vancouver-Specific Context

The Builders Lien Act applies province-wide in BC. There's no municipal variation — the rules are the same whether you're in Burnaby, Surrey, or Abbotsford. One important nuance: if a lien IS filed, you should consult a BC construction lawyer promptly. You can also request a certificate of substantial completion from your contractor, which formally triggers the 55-day period and creates a clear paper trail. For larger projects, some homeowners use a lawyer or notary to manage holdback funds in trust.

Practical Tips

Keep every invoice, payment receipt, and written communication throughout the project. Before releasing the final holdback, it's worth doing a title search through BC Land Title to confirm no liens have been registered — this costs roughly $10-$20 online at ltsa.ca. On larger projects ($200,000+), some homeowners ask their GC to provide a statutory declaration confirming all subtrades and suppliers have been paid before releasing the holdback.

The holdback applies to the head contract (your agreement with the GC). If you're hiring multiple trades directly — acting as your own general contractor — the holdback applies separately to each contract. That means more paperwork, but also more protection.

Don't skip this. Releasing holdback early is one of the most common and costly mistakes homeowners make. If your GC pressures you to release the holdback before the 55 days are up, that's a red flag worth taking seriously.

For help finding reputable, licensed contractors in Metro Vancouver, browse the Vancouver Construction Network directory — it's a good starting point for connecting with trades who understand BC's lien and payment rules.