Peelseek.com

The Renovation Contract

One of the major reasons for disputes over renovation work is the lack of a contract. The best way to avoid this is to draw up an agreement describing the work to be done and the cost of this work. This contract becomes a legal document, binding both parties once they have signed it.

Don't sign anything until you are fully satisfied it describes exactly what you want and contains everything you have agreed upon. Assurances that are made in writing are binding. If you are not sure of something in the contract, ask for an explanation. If you're still in doubt, take it to a lawyer.

Both you and the renovator should sign two copies of the contract, one for you and one for the renovator. Some contractors may offer a discount for payment in cash with no written contract. Don’t be tempted. “Underground economy” transactions are risky, and the pitfalls can easily offset any promised savings.

According to Canada Mortgage and Housing Corporation’s (CMHC) About Your House fact sheet, Sample Renovation Contract, the contract should 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;
• a detailed description of the project, plus sketches and a list of materials to be used;
• the type of work that will be subcontracted;
• the right to retain a construction lien holdback as specified under provincial law;
• a clause stating that work will conform to the requirements of all applicable codes
• start and completion dates;
• an agreement stating whether it is the homeowner or the renovator who is responsible for obtaining all necessary permits, licenses, and certificates;
• the requirement that the renovator be responsible for removing all debris as soon as construction is completed;
• a statement of all warranties, explaining exactly what is covered and for how long;
• a statement of the renovator’s public liability and property damage insurance;
• price and terms of payment.

No matter how well you plan your project, changes will probably be necessary. These can result in increased costs and delays. To protect yourself and the renovator, changes should be made only through a written change order detailing what’s involved and the associated cost differences. Do not accept verbal assurances, always have it documented in writing.

For more information of this subject, or for a complete list of CMHC publications, programs and videos on renovation, ask CMHC at 1-800 668-2642 or visit CMHC's Web site at www.cmhc.ca. Canada Mortgage and Housing Corporation is Canada’s national housing agency and a source of objective, reliable housing expertise.