What Should be in Your Home Renovation Contract

 

Get a contract that caters to your needs. Here's how.
I have known some home owners who've agreed to a huge home renovation project with just a hand shake. As honorable as that may be, it is not smart. The contract is where you, the home owner, can protect yourself against unscrupulous contractors who want nothing more than to take you and your life savings for a ride. Get smart. Get a contract and make sure you cater it to your needs. Here's how.

 

Easy to Read

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Your contract should be readable, no-nonsense and should detail everything your contractor is doing and what materials he/she will be using.

 

Payment Plan

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One of the biggest complaints I hear from home owners who've been taken by their contractor is that they paid too much money upfront. Most contracts that home owners sign are based on time. THIS IS TOTALLY INCORRECT. You need to demand a contract and payment plan based on milestones, not set time periods. A good payment plan starts with the down payment. This should be no more than 15% up to $2,500 maximum. Never pay a contractor more than $2,500 before they've even stepped foot in your house. Following the down payment, there are four more payments which are all milestones. Decide how you want to break the work up into three major departments. For example, if you are having electrical, plumbing and stud walls installed, a milestone payment may go like this: 25% when electrical is finished, 25% when plumbing is complete and 25% when the walls are up. Never pay until each section is completely finished. Contractors will work more efficiently if it means they will get paid sooner. Once they have been paid for work, they are less likely to make it a top priority. The final 10% should NOT be paid until 30 days after the final day of work. You are permitted to do this by law. This ensures that if anything breaks down in the first month, you still have some money held back, forcing the contractor to do the fixes before receiving their final payment.

 

 

NOTE: contractors are not allowed to charge more than 10% over the original quote unless agreed to in writing by you, the home owner. A good contractor should know of any possible surprises ahead of time.

 

Start/Finish dates

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It is important to set firm start and completion dates. The Ontario Provincial Government recently passed Bill 180 which protects home owners. This bill voids any contract if the contractor is more than 30 days late in delivering the work. Work these dates out ahead of time keeping them reasonable but definite.

 

Permits

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It is the homeowner's responsibility to obtain all proper permits for the work occurring on your premises. Make sure it says in the contract that all permits will be supplied by the contractor and all work will be completed to building code by certified and licensed contractors and sub-contractors. Make sure anyone who is going to work on your property shows you his VALID license before work begins. It is your legal right to request this.

 

 

Follow these tips and your next home renovation project should be a successful one.

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