Having a signed agreement with your contractor

Region: Ontario Answer # 1961

When looking to hire a contractor for home renovations or construction projects, there are a number of things you can do to protect yourself as a consumer.

Before you hire a contractor

Before you even agree to hire a contractor, it is a good idea to get 2 to 3 references from people who have used this contractor before for similar types of work. The contractor should provide you with these when you ask. You should also do various searches for the contractor you want to hire to make sure they are reputable. This can include the Better Business Bureau, the Ontario Consumer Beware List, and local Chambers of Commerce.

It is also a good idea to get 2 to 3 written estimates from different contractors for the work you want done, and the contractor you choose should include this estimate in a written contract. Under Ontario’s Consumer Protection Act, the final price for the project, which includes all goods and services, cannot be more than 10% over the original estimate. This does not apply if you have agreed to more work being done, or to a new price.

Have a written contract

Whether your home renovation or construction project is big or small, any time you plan to hire a contractor you should have a written contract or agreement setting out the rights and obligations of each party, specifics of the work to be completed, timelines for the work, payment amounts and triggering events for payments (for example, completion of demolition for a first payment), and how disputes will be resolved.

A written contract is a binding legal agreement that helps to remove the chance of disagreements or risk arising from vague or uncertain aspects of the project, such as quality of materials to be used, upkeep of the work site, and the contractor’s responsibility to maintain workers compensation and other liability insurance.

Even if your contractor insists a contract is not needed, you must insist on a written agreement for your own protection. If a contractor refuses to sign an agreement, you should not do business with that individual.

What should the contract contain?

Essential aspects of a typical home renovation or construction contract include:

  • Name, address and Business Number of the contractor
  • Date of the agreement
  • Drawings and project specifications
  • Description of the work to be performed
  • Permits requirements and who is responsible for securing permits
  • Responsibility of the contractor for hiring, supervising and paying sub-trades
  • Work schedule, deadline for “substantial completion” and deadline for full completion
  • A definition of “substantial completion” (for example, 95% of the job)
  • Process for changes to the project requirements, such as the use of “Change Orders” that must be signed by both parties
  • Terms of payment
  • Payment schedule
  • Standards of work
  • Warranty and guarantees
  • Contractor liability insurance
  • Builders risk insurance

Most importantly, never agree to a contract that requires full or a substantial payment up-front before any work is done. Most contractors can begin a project with as little as 10%-15% or no money down.

For more information, visit Consumer Protection Ontario. For legal help, contact a lawyer.




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