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Practical guide · Québec · 2026

Holdbacks, denunciation, legal hypothec: the guide to getting paid in Québec construction (2026)

in Québec construction: the practical guide (2026)

≈ 10%Typical holdback
30 daysTo preserve the hypothec
13 weeksCash-flow horizon

Last updated: September 2026 · Amounts and rates are indicative — verify with official sources.

01

Why your account is empty while your projects are profitable

Three mechanisms widen the gap between your margin and your money:

  • The holdback (often 10%) ties up part of every payment until the end of the work or the correction of deficiencies — sometimes for months.
  • Progressive billing collects late: you submit a payment application, then wait for the supervisor's approval and the client's payment.
  • Disbursements come early: site payroll is due every week under CCQ rules, and materials are paid long before the client pays their instalment.

The result: you finance your client's project with your own money. Until you manage this timing gap, every new contract can put you at risk instead of making you richer.

02

The 10% holdback: what it is, and what it isn't

This is the industry's costliest confusion. Let's set the record straight:

  • In Québec, the holdback is standard contractual practice, not a legal requirement. It is typical of CCDC-type contracts: the client holds back about 10% of each payment as protection against deficiencies. Ontario has a statutory holdback regime; Québec does not — everything depends on your contract.
  • Its release follows your contract: usually at completion or after deficiencies are corrected, under the agreed terms. Read that clause before signing, not after.
  • Never count it as available cash. A holdback receivable is not cash flow: it's a future claim with an uncertain timeline. Track it separately so it doesn't artificially inflate your perceived liquidity.

In practice: on a $200,000 contract, $20,000 sleeps with your client for months. If your margin is 10%, that's your entire profit tied up. Build this cost into your bids and your planning.

03

Prompt payment: what the law actually provides in 2026

Good news: Québec has moved. But not everywhere, and not in the same way. Here is the real picture:

Provincial public contracts: the regime is in force. Since September 8, 2025, the Regulation respecting prompt payment and the rapid settlement of disputes in respect of construction work has imposed a mandatory payment schedule on the entire contractual chain, following a successful pilot project from 2018 to 2021. Progressive rollout by contract value: since September 2025, building contracts over $750,000 and civil engineering over $2,500,000; since September 2026, building contracts from $75,000 to $750,000 and civil engineering from $675,000 to $2,500,000; from September 2027, all covered contracts regardless of value. The regime also creates a rapid dispute-settlement mechanism: an accredited third-party decider rules in about 50 days (after a mandatory attempt at amicable settlement), and a payment request not contested on time is deemed valid.

Municipal contracts: the law is adopted, the regime is not yet in force. On March 18, 2025, the National Assembly adopted Bill 79, now the Act respecting contracts by municipal bodies, which lays the groundwork for a prompt-payment and dispute-resolution regime for municipal works. But be careful: this regime is not yet in force — a government regulation still has to set out its application details. If you work for cities and municipalities, watch for its coming into force: it will change your collection timelines.

Federal contracts: the law applies. The Federal Prompt Payment for Construction Work Act has been in force since December 9, 2023 for federal real property. Ontario, Saskatchewan and Alberta are exempted; Québec is not.

Private contracts: nothing automatic. For your private clients, no statutory prompt-payment regime applies in Québec: timelines are whatever your contract says. Your protection is the legal hypothec (see below) — and rigorous billing.

06

The 13-week cash flow forecast: your radar

Why 13 weeks? Because it's roughly a quarter: long enough to act before the dip, short enough to stay reliable. And in construction it's the natural cycle — between the payment application, its approval and collection, a quarter goes by fast.

Here's how to build one, simply, in a spreadsheet:

  1. Start from your actual bank balance, today.
  2. List your expected receipts, week by week: issued invoices and pending payment applications, with the date the money will actually arrive. Be honest: if your clients pay on average at 45 days while your invoices say 30 days, forecast 45 days.
  3. List all your disbursements, week by week: payroll (every week), materials, subcontractors, CCQ remittances, taxes, loan payments, rent. Forget nothing — completeness is what makes the tool reliable.
  4. Keep holdbacks separate: record them as receivables, never as available cash.
  5. Compute your projected balance each week and flag the weeks where it drops below your safety floor (in practice, 30 to 60 days of fixed costs).
  6. Update every week: a rolling forecast — add a week at the end, drop the one that just passed, replace forecast with actuals. Fifteen minutes a week beats a perfect analysis never redone.

When the radar flags a dip 6 weeks out, you have time to act: chase late clients, negotiate terms with a supplier, delay a purchase, draw on your line of credit. Without radar, you discover the dip the day payroll bounces.

07

The 8 mistakes that kill SME cash flow

  1. Bidding too low. A 5% margin won't survive a surprise, a 10% holdback and a late-paying client. The lowest price wins the contract and loses the company.
  2. Not billing change orders — or billing them too late. Every unbilled scope change is work paid out of your pocket. Bill the change order as soon as it's approved, not at the end of the project.
  3. Letting clients pay late with no systematic follow-up. Without a collection process (call at 7 days, letter at 15, formal demand next), delays become the norm. A client who pays late without consequence will pay even later next month.
  4. Growing too fast. Every new jobsite needs working capital before it pays off. Three contracts starting at once can drain your account even if they're all profitable on paper.
  5. Counting holdbacks as cash. See above: a holdback receivable is not money.
  6. Having no cushion. Aim for 30 to 60 days of fixed costs in available reserve. Below that, the slightest late payment becomes an emergency.
  7. Forgetting the Revenu Québec attestation. As soon as your contracts with the same client reach $25,000 (excluding taxes) in the calendar year, your subcontractor must hold a valid attestation and give you a copy — otherwise your payments can be blocked. An administrative oversight that costs dearly.
  8. Forgetting to denounce your contract. You're a subcontractor or supplier with no direct contract with the owner? Without a written denunciation before or during the work, your legal hypothec covers nothing. One forgotten letter can cost you an entire unpaid invoice.
08

What to do when a client pays late?

Act in stages, without waiting:

  1. Follow up fast and in writing. A call in the first week of delay, then a follow-up email that leaves a trail. Most delays are resolved at this stage — provided you don't let a month go by.
  2. Send a formal demand letter. It signals how serious you are and officially starts the clock.
  3. Protect your legal hypothec. Remember: 30 days after the end of the work to register your notice. Don't let that deadline expire while you're "waiting for things to work out." If you're a subcontractor, check that you did denounce your contract to the owner — without denunciation, your legal hypothec is compromised.
  4. On covered public contracts, use the rapid dispute-settlement mechanism: a third-party decider rules in about 50 days.
  5. Think notary. Since September 1, 2026, a claim recorded in a notarial act may, in certain cases, be enforced without going to court. Having your payment agreements recorded by notarial act gives you real leverage — talk to your notary.

And above all: don't finance someone else's jobsite indefinitely. A client who doesn't pay is a risk, not a relationship to preserve at all costs. If late payments point to a deeper issue, a 360° operations management diagnostic pinpoints it before cash flow gives out.

09

Can I hand my cash-flow follow-up to someone else? Yes.

Chasing clients, tracking receivables, progressive billing, the 13-week forecast: all of this can be delegated. Administrative outsourcing exists for that: Pamela Paredes, a management consultant specialized in construction SMEs, can take over your billing, your collections and your cash-flow tracking — with the rigour these tasks demand and your jobsites don't leave you time for.

10

When cash flow becomes a symptom

If your month-ends are tight while your order book is full, the problem usually runs deeper than cash flow: poorly priced bids, change orders that get lost, nobody owning the numbers, patched-together admin processes. That's exactly what a 360° operations diagnostic brings to light: it reveals where your money leaks between the office and the site — long before the account runs dry.

11

Bridging the gap: credit line, factoring and cash reserve

Even with profitable projects, your account can hit dry spells: you bill as work progresses, but the money arrives weeks later — after approval, the holdback and payment delays. That gap between money going out and money coming in is normal in construction; it has to be financed, not endured.

Three levers, to combine according to your business’s real cycle:

  • The operating line of credit — a short-term bridge covering the gaps between payroll and collections. It gets repaid when the money comes in; its cost should stay below the margin it protects.
  • Factoring — selling your invoices to a third party to get paid faster. Useful when the gap is deep, but its cost and terms deserve careful evaluation before signing.
  • The cash reserve — a cushion you build during good months to ride out the gaps without external financing. It’s the cheapest lever, but it takes discipline when times are good.

The right choice depends on your real cycle: measure your average collection times, spot your lean months, then talk to your accountant and your banker. Financing chosen on the numbers beats an emergency solution picked under pressure.

12

FAQ

What is the 10% holdback?

It's a standard contractual clause (typical of CCDC contracts) under which the client holds back about 10% of each payment until completion or the correction of deficiencies. It protects the client against defects; for you, it's a future claim to track separately from your cash flow.

Is the 10% holdback mandatory in Québec?

No. Unlike Ontario, Québec has no statutory mandatory holdback: everything depends on your contract. Check the clause before signing — rate, terms and release timeline.

I'm a subcontractor — do I have to denounce my contract to the owner?

Yes — in writing, ideally before work begins. Without denunciation, the legal hypothec cannot secure your work (art. 2728 C.C.Q.). Exempt: those who contracted directly with the owner, and workers.

I forgot to denounce my contract. Can I still do it?

Yes — do it immediately: the hypothec will cover work, materials and services provided after the denunciation — but not those from before. That's why you should denounce before starting.

How do I build a 13-week cash flow forecast?

Start from your actual bank balance, list expected receipts and disbursements week by week over 13 weeks (with realistic dates, not optimistic ones), keep holdbacks separate, compute the projected balance each week and update the table weekly. A simple spreadsheet is enough.

Is there a prompt-payment law in Québec?

Yes, but only for certain contracts: the Prompt Payment Regulation has been in force since September 8, 2025 for provincial public contracts (progressive rollout until 2027); the law is adopted for municipal contracts but the regime is not yet in force; the federal act applies to federal real property. For private contracts: nothing automatic, everything is contractual.

What should I do if a client pays late?

Follow up fast and in writing, send a formal demand letter, protect your legal hypothec (30 days after the end of the work to register your notice), and on covered public contracts, use the rapid dispute-settlement mechanism. Don't let it drag: every week counts.

What is the legal hypothec for construction?

It's a security provided in articles 2726 and 2727 of the Civil Code of Québec for those who took part in the construction (contractors, subcontractors, suppliers, workers...). It exists without publication for 30 days after the end of the work, is preserved by a notice registered at the Land Registry, is extinguished after 6 months without action, and takes priority over earlier conventional hypothecs.

How much should I keep as a cash cushion?

In practice, aim for 30 to 60 days of fixed costs in available reserve. Below that, the slightest late payment becomes an emergency; above that, it's money sitting idle.

Sources

  1. 01ACQ Construire — Comptabilité de chantier au Québec : le guide 2026
  2. 02Mondaq — Paiements rapides et règlement des différends en construction : un nouveau régime à connaître (sept. 2026)
  3. 03Transports Québec — Rappels de bonnes pratiques, nouveau règlement sur le paiement (printemps 2026)
  4. 04Muni-Express — Guide explicatif, Loi sur les contrats des organismes municipaux
  5. 05CEGQ — Paiement rapide dans le secteur municipal : loi adoptée (PL79, 18 mars 2025)
  6. 06CMEQ — Adoption du projet de loi 79 (20 mars 2025)
  7. 07Registre foncier du Québec — Hypothèque légale construction, art. 2727 C.c.Q.
  8. 08Mondaq — Entrée en vigueur de la Loi fédérale sur le paiement rapide (9 déc. 2023)
  9. 09Fodago — Exécution forcée du paiement d'une créance constatée par acte notarié (14 mai 2026)
  10. 10Brixx — Prévision de trésorerie sur 13 semaines
  11. 11ACQ Construire — La dénonciation de contrat : une étape cruciale et toujours aussi importante
  12. 12CEGQ — Hypothèque légale de la construction : la Cour d'appel rappelle qu'il faut dénoncer son contrat
  13. 13Girard Avocats — Sous-traitants : pourquoi il est crucial de dénoncer votre contrat pour préserver votre droit à l'hypothèque légale
  14. 14Québec Habitation — La dénonciation de contrat et le droit à l'hypothèque légale de la construction
  15. 15droitimmobilier.ca — L'hypothèque légale de la construction : un moyen efficace pour les entrepreneurs