Home renovations made simple
How do you find a contractor you can trust? With Canadian contractors in high demand in Canada, it’s tempting to hire the first contractor who has any availability. But taking the time to compare quotes and vet your contractor is well worth the extra effort. To ensure the success of your home renovation, you will want to ask careful questions upfront, protect your financial interests, and read your contract agreement thoroughly.
Smart Reno requires our contractors to meet five key criteria for trustworthiness: current license, valid insurance, a clean background check, glowing customer reviews, and a portfolio of relevant experience. As the homeowner, you are still responsible for your own contract. For the safety of your renovation, you’ll want to ask some important questions upfront, protect your financial interests, and read your contract agreement thoroughly.
Questions to ask your contractor before starting your project
Make sure your home renovation is a success by asking your contractor questions about their business practices, licensure, and professional history before signing a contract agreement. The questions below will help guide your interview.
Can I see a copy of your license?
Ask this question even if your contractor doesn’t require a license in your province or territory. Having a license to practice keeps your home contractor accountable to the safety and competency standards of their professional regulatory organization. All Smart Reno contractors are licensed and verified, but it is still a good practice to ask for documentation.
What is a realistic timeline for this project?
Get in writing a specific timeline for the completion of your home renovation before signing your contract agreement. If your contractor cannot give you a definite completion time because of lockdowns and disruptions in the supply chain, make sure that your contract ties your payments to the achievement of project milestones, rather than to set calendar dates. Don’t pay for work that hasn’t been completed.
Can I see your contractor liability insurance?
Your contractor should carry insurance that covers both the possibility of property damage and the threat of injury to workers employed during the completion of your project. Ask to see their builder’s risk insurance as well as their letter of clearance from the provincial worker’s compensation board. If your contractor doesn’t carry both types of insurance, you may be liable for workers injured or property damaged during your home renovation.
Will you obtain a building permit required for this job?
If a building permit is required for the work, you can discuss with the contractor whether they will file for the permit or if you will need to. If your contractor says you don’t need a permit, get a second opinion from your local permit-issuing authority for the success of your renovation.
What is the payment schedule?
As discussed above, tie payments to completed components of your home renovation instead of scheduling payments on specific dates.
How can you take action to protect my property?
Qualified and reliable contractors will have a plan in place to prevent burglaries and damage to your property during your home renovation. Fire extinguishers should be located at key points throughout the worksite. If part of your home is left exposed at night during the renovation, security cameras or motion-activated lights may be required to protect against break-ins. Ask your contractor about water damage precautions as well. Above all, ensure that your contractor carries insurance for property damage as well as worker injuries.
Do you offer a warranty or guarantee for your service or materials? If so, for how long?
Some contractors include a warranty in their contract. These warranties offer the full replacement value of your project for a specified number of years after completion. Make sure that your contractor clarifies how much you will be reimbursed throughout your warranty period, as well as whether both labour and materials costs are included.
Can I see previous similar projects you have completed?
Your contractor should be able to provide you with details of completed projects similar to your own in price and outcome. Ideally, they should also have reviews from satisfied customers. A good contractor will have a proven track record of delivering quality home renovations. You can view any available ratings from previous customers for your Smart Reno Approved contractor when you log in to the Smart Reno Homeowner dashboard.
Developing your renovation budget is not the only financial consideration you should consider when hiring a contractor. Protect yourself from hidden costs and financial exploitation by comparing quotes, paying an appropriate down payment, and avoiding extra supplier fees.
Down payments are common in renovation contracts; they signify your commitment to do your renovation and enable your contractor to book their subcontractors and purchase some materials in advance.
If your contractor asks for a down payment greater than 15 percent of the value of your home renovation, it’s important to understand why, and decide whether you are comfortable with the financial risk you are taking. The province of Ontario recommends a down payment of no more than 10 percent of the value of the project.
This is because your deposit is often non-refundable according to the terms of your contract—paying over ten or fifteen percent of the full cost increases your personal financial risk. As with anything else in life, never take more risk than you are comfortable with.
Selecting the best quote
Getting at least three quotes allows you to compare contractors, before choosing the best fit for your home renovation. The lowest quote is not always the right option for your project. When two contractors offer similar rates, and the third contractor names a dramatically lower price, that should set off alarm bells. Ensure each quote has the same scope, and that you discuss in advance how changes will be managed. Some contractors might give you a lower quote but have not considered the same scope of work, which may lead you to pay more over the course of the project.
Avoid hidden fees for renovation materials
The price of lumber is continuing to rise as of May 2021. Now more than ever, you don’t want to pay for more materials than you expected. Two ways homeowners can protect themselves from paying more for home renovation materials are:
- Have a fixed-price contract—Also known as a lump sum contract, it sets out the total cost for the work, including all materials. These types of contacts are a good option for smaller home renovation projects.
- Consumer Protection Act—For homeowners in Ontario, the Consumer Protection Act (CPA) states that if an estimate is included as part of your contract, the final price for goods and services cannot exceed more than 10 percent of the original estimate, unless you have agreed to a new price.
How to read and understand your contract
Take a two-step approach to reading your contract. First, skim through the contract looking for major red flags. Address vagueness, inconsistencies, and outright avoidance of keeping proper records.
Once you have that under control, flip the script. Determine whether the provisions you want to see are present in your contract. If you can’t find them, advocate for their inclusion.
Not sure where to start? Read below for common red flags, and for examples of good provisions to include in a contract.
Home contract red flags
Uncertain termination and renewal terms—This leaves you with an open-ended project. Your contract should contain conditions for canceling your home renovation project, including who to notify and how far in advance a termination notice should be filed.
Blank spaces—They are often present in computer-generated contracts. Consider deleting or filling in these spaces before the contract is signed. Otherwise, changes could be made to the signed contract without your knowledge.
Vague confidentiality provisions—This is never a good sign. Your contract should explicitly state that your contractor cannot share your personal and private information without your express permission.
Vague project descriptions—These don’t hold your contractor accountable for each specific step in your home renovation. Project milestones should be described in detail in your contract.
The Ontario government advises against cash deals for home renovation work. If your contractor requires a cash transaction, they should write the reason into the contract agreement and provide you with a receipt.
Home renovation contract checklist
- Dispute negotiations—Include these in your contract. If a disagreement between you and your contractor cannot be resolved, calling in a third-party mediator can achieve a fair solution without resorting to litigation.
- Default terms—Outline what happens if either party in a contract agreement doesn’t fulfill their obligations. Avoid an accidental breach of contract by understanding your responsibilities and make sure your contractor is required to hold up their end of the bargain.
- Proof of an insurance policy—This protects you from being liable for property damages and worker injuries. Look for proof of insurance in the contract even if your contractor showed you their papers upfront.
- Clear payment schedule—This is key to the successful completion of your home renovation. Specify payment milestones within your contract and clarify that payments are due after milestones are achieved.
- Review your contract—Revise it multiple times and have friends and family read it over to see if they catch anything you missed.
- Keep extra copies—Retain all copies of your contract agreement. You or your contractor may mutually agree on contract modifications as the home renovation progresses. It’s a good idea to have the original, and any updated forms of the contract on hand to establish a timeline of these modifications.
- Subcontractors are paid—Ensure your contractor pays their subcontractors. In Ontario, subcontractors aren’t paid, they are legally allowed to put a lien on your home 90 days after the project completion date.
Find the best contractor for your project
Your home renovation is a team effort: you provide the vision, and your contractor provides the skills, knowledge, and expertise to make your dreams a reality.
Start out by obtaining quotes from local contractors. With Smart Reno’s renovation project planning tool, you will receive up to five free quotes when you share the details of your planned home renovation. Narrow down your list of contractors by asking to see previous similar projects they have completed. If you like the customer testimonials and the look of the final renovations, put the contractor on your shortlist and ask them the questions listed above.
Your home is one of your biggest assets, and you’ve made the decision to invest further in it by doing a renovation. Read your contract agreement carefully and take steps to protect your finances.
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This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.