Thursday, Sep 27, 2012

The renovation contract
Get it in writing or forget it

If you are planning to hire a contractor to renovate or repair your home, it is essential to have a detailed written contract. Even the smallest job should be put in writing.

Lack of a contract is a major source of disputes over renovation work. The best way to avoid any problems is to draw up an agreement describing the work to be done and the cost to do it. This contract becomes a legal document, binding both parties once they have signed it.

Renovation companies range from one-person operations to sizeable outfits with salespeople, administrative staff and on-site personnel. The contract is between you and the company and should specify the key individual from the company who will be performing or managing the work and will be your primary contact.

A renovation contract should always include: the correct and complete address of the property where the work will be done; your name and address; the renovator’s name, address and telephone number; and a detailed description of the project including a list of materials to be used, the type of work that will be subcontracted and what permits are required. Larger projects may require additional documents, such as drawings and plans, which should be attached and become part of the contract.

The key word is detail. The description of work should outline thoroughly what is to be done, step by step. It can run several pages in length and can be attached to the contract as a separate document, to be signed by both parties. One way to decide if the description is detailed enough is to think of it as a set of instructions. Would two people using this description end up with the same result? Or are there gaps in the information or a need for clarification?

Other important items to include in the renovation contract should be the right to retain a construction lien holdback as specified under provincial law, as well as a clause stating that work will conform to the requirements of all applicable codes. Start and completion dates should be clearly stated, and there should be a statement of all warranties, explaining exactly what is covered and for how long.

As a homeowner, you need to protect yourself and make sure that you are not liable for injury and/or loss of income if someone gets hurt while working on your renovation. By law, your contractor must register the company’s employees for workers’ compensation. Ask your contractor for proof of registration and be sure your contract includes a statement of the renovator’s public liability and property damage insurance.

Don’t be tempted by contractors who offer a discount for payment in cash with no written contract. These underground-economy transactions are risky, and the pitfalls can easily offset any promised savings. You should never feel awkward about asking for a written contract because professional contractors know that a written contract is an indispensable part of good business practices. It protects them as well as their customers.

To learn more about renovation contracts, Canada Mortgage and Housing Corporation (CMHC) has a free About Your House fact sheet called Sample Renovation Contract. For your copy visit our website or call our toll-free number: 1-800-668-2642.

Mark Salerno is district manager for the Greater Toronto Area at the Canada Mortgage and Housing Corporation. You can reach him at 416-218-3479 or

Renovation archive

What do you think is a reasonable price for a kitchen renovation?
$10, 000
$25, 000
$50, 000
$100, 000