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House purchases, sales & mortgages At Drysdale Bacon McStravick we have developed a solid reputation and have a great deal of experience in real estate law. We are committed to providing efficient, cost-effective, and thorough legal services, fully explained, in order to keep our clients informed and minimize risks. Protecting yourself during home renovations Congratulations! Now that you have purchased your home, dozens of design ideas are coming to mind. “Do I paint? Add new double pane windows? Improve the insulation in the attic? How about an addition? You are not the only homeowners making these plans. Every year, North Americans spend over $110 billion on home improvements. A large portion of this money goes to contractors, doing work for you. There is no such thing as a 100% bullet proof home renovation contract. However, these are some things that you can do to protect yourself: 1. Make sure you get at least three quotes from contractors or suppliers for your project. Prices can vary dramatically. 2. When speaking with contractors or suppliers, particularly the ones that you chose to work for you, MAKE NOTES of your discussions and negotiations. Use these notes to ensure that everything you expect to be done is listed in the contract. In other words, develop as detailed a list as possible of what work your contractor will do or what goods he will supply, including who applies for building permits and arranges for inspections, how the site will be locked up or protected during work, clean up requirements as the work progresses, and who is responsible for removing demolition or construction debris for the property and disposing of it. 3. Include in your contract, a complete list of supplies your contractor will use, including at least the nature of the materials, sizes, quantities and colours to be used, and if possible specifying brand or model names. In case the specified product is no longer available, include a clause saying that you must approve any substitutions. 4. Spell out the financial terms of the deal. An estimate does not constitute a price guarantee. Find out exactly how you will be charged, and if possible, set a ceiling for the cost of the list of what your contractor will be doing. Under the Builder’s Lien Act, a provincial statute, you must hold back 10% of the full value of the contract from the contractor for 41 days following completion of the project. This gives workers and suppliers a fund to draw on if they have not been paid. If you do not hold back this money, you are still liable to provide the 10% fund, so you could end up paying more for the work. 5. Put any changes to the work, sometimes called “extras” in writing (or also referred to as a change work order), specifying what is to be done and how you will be charged. Make sure both you and the contractor sign the “extra” approval. 6. Include starting and completion dates. You don’t want your kitchen or bathroom renovations going on for months! Try including a penalty clause, for example a price reduction, if your contractor is late in finishing. Your contractor may be reluctant to agree to this, because matters outside his control like weather can delay his progress. 7. Ask for a warranty of workmanship, specifying what is warranted, for how long, and who will honour the warranty. Remember that a warranty is only as good as the company giving it. Ask how long your contractor has been in business, as this will give you some indication of how likely it is that he will be around to fix what needs fixing. 8. Keep a diary while the work is going on. Include notes of the sort of activity being performed, who is there from the contractor, or at least how many workers are there, and when major materials arrive. Keep notes of anything your contractor tells you that relates to his job performance. A photo journal is both for review later and potentially helpful should a dispute with the contractor arise. 9. Include a provision that your contractor will prove he has insurance for workers’ compensation, property damage, and personal liability. If it is a big renovation project, you may even wish to ask the contractor to post a “Performance Bond” that will give you money to complete the project and fix any mistakes even if the contractor goes broke. 10. If you decide to hire workers as employees, rather than as contractors, remember that you must register and pay a premium under the Worker’s Compensation Act. This is not another government tax. If your employees are injured, and you have not arranged for coverage, you could personally be liable to pay them.
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