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Who Manages and Pays the Subcontractors on a Custom Home? (And Why It Decides Your Lien Risk)
Builders and contracts Construction Act From a builder
Who Manages and Pays the Subcontractors on a Custom Home?
Every trade on your site is going to be paid by somebody, and the Construction Act cares a great deal about who. Here are the three ways it can work and what each one means for your money.
Short version: Under a general contractor, the builder hires, manages and pays every trade from your draws, and you hold back 10 percent on each payment to protect yourself from the builder not paying them. Under a construction manager, you hold the trade contracts and pay each trade yourself, with the manager coordinating for a fee. As an owner-builder, you are the general contractor. The holdback, the lien exposure and the paperwork follow the money.
Model one: the general contractor (most custom homes)
You sign one contract with the builder. The builder signs contracts with the excavator, the framer, the plumber and the rest, schedules them, inspects their work and pays them. You pay the builder in draws against stages. You never see the trades’ invoices, and you do not need to.
Your exposure: if the builder takes your draw and does not pay a trade, that trade can lien your property even though you paid. That is exactly what the Construction Act’s 10 percent holdback is for: you keep 10 percent of every payment until the lien period after substantial performance has passed, and if a lien appears, that money is the fund that settles it. Release the holdback early and you have given away your protection. The holdback guide and liens for homeowners explain the mechanics.
Signs it is working: trades on site are the ones the builder named, nobody calls you about money, and the builder can show you WSIB clearances for the trades when you ask. WSIB clearance certificates are a public lookup.
Model two: the construction manager
You sign contracts with each trade directly, and you pay them directly. A construction manager, which can be a builder working on this basis, plans the job, gets the quotes, schedules and supervises, for a fee or a percentage. The trades’ prices are visible to you, which is the attraction. The responsibility for paying them, holding back on each one, and sorting out a lien is yours, which is the cost.
In this model you are holding back 10 percent on every trade contract separately, tracking substantial performance for each, and releasing each one at the right time. It is manageable with a spreadsheet and some discipline. It is a mess without them. Cost-plus invoices and records describes the paperwork, which is similar.
Model three: owner-builder
You are the general contractor. You find, hire, schedule, inspect and pay every trade, pull the permit in your own name, carry the insurance, and hold back on each trade as the Act requires. You save the builder’s fee and margin and you take on the builder’s job, including the one nobody mentions: being the person every trade calls at 6:40 in the morning. Owner-builder vs hiring a builder is the honest comparison.
What the Construction Act requires whichever way you go
- Holdback. 10 percent of the value of work and materials, held by whoever is paying, until the lien period expires after substantial performance (and a separate finishing holdback after completion).
- Prompt payment. Since the 2019 amendments, an owner has 28 days to pay a proper invoice from the contractor or deliver a notice of non-payment, and the contractor has 7 days to pay the subs after that. The clock runs whether or not you knew about it.
- Liens. A trade or supplier who is not paid can register a lien within 60 days of the last supply or substantial performance. The holdback is the fund that answers it; the lawyer is the person who handles it. How a lien gets registered shows the other side.
- Trust. Money you pay a contractor for a project is held in trust for the trades and suppliers on that project. A builder who spends your draw on another job is breaching that trust, which matters when things go wrong.
Questions to settle in the contract
- Who hires each trade, and who pays them?
- Can I see the WSIB clearance and insurance certificate for each trade?
- How is the holdback calculated and when is it released?
- What happens if a trade liens the property for the builder’s unpaid invoice?
- Can I supply any materials or trades myself, and how is that priced? (Owner-supplied materials is its own page for a reason.)
- Who signs the certificate of substantial performance, and when?
Related guides on this site
Sources and further reading
Questions people ask
Who pays the subcontractors on a custom home?
Under a general contractor, the builder pays them from your draws. Under a construction manager, you pay each trade directly. As an owner-builder, you pay everyone. The holdback and lien exposure follow whoever is paying.
Can a subcontractor lien my house if I paid the builder?
Yes. If the builder did not pay the trade, the trade can lien your property within the lien period. The 10 percent holdback you are required to keep is the fund that protects you.
What is prompt payment in Ontario construction?
Under the Construction Act, an owner must pay a proper invoice within 28 days or deliver a notice of non-payment, and the contractor must pay subcontractors within 7 days of being paid. The clocks run automatically.
Should I ask my builder for WSIB clearances for the trades?
Yes. A clearance certificate shows the trade is registered and in good standing with WSIB. Without it, an injury on your site can become your problem.
Before you sign anything
Run the contract through our free checker; it flags the clauses that cause most of the arguments we get called about. Building with us? The contract comes with the clauses already in it.
Reviewed and updated October 2026. Costs are Ontario ranges, not quotes; code references are to the Ontario Building Code in force at that date.
