The media has recently reported on RCMP warnings regarding supposed repair contractors offering discounted and shoddy or fraudulent work. Although it is always tempting to try to keep costs as low as possible, it is important to have an up-front discussion about the scope and nature of the agreement and to reduce the agreement to writing in a renovation contract.
Many of the issues that should be covered in your negotiation (and in the written document) can help protect a homeowner against being taken advantage of by “fly by night” operations.
Negotiating Renovation Contracts Reduces the Risk of Being Ripped Off
Some of what you should consider covering includes:
- Is the contractor looking for an overly large up-front deposit that can’t be explained by a large material order (and should you consider paying directly for the material to ensure it is delivered)? Until the material is actually ordered, paid for AND delivered to the site, a homeowner who pays an overly large deposit is significantly at risk.
- Is the contractor an incorporated company, a sole proprietor – or is the contractor being deliberately vague about the entity you are contracting with? A contractor that is deliberately vague about how they have structured their business may be actively taking steps to make it difficult for you to hold them to account in the future if problems arise.
- Can the contractor provide proof of insurance? Insurance not only protects you in the event of negligent work, but it protects you if during the course of construction or renovation something happens that hurts a passerby.
- Can the contractor provide proof of WCB coverage? If a contractor is not covered by WCB, a worker hurt on your property can look to you for coverage. It is essential to ensure there is proper WCB coverage.
- Can the contractor provide a business license and local references? Local references are especially key, to avoid being taken advantage of by individuals who move from community to community, leaving behind shoddy work and victims of fraud.
- Does the contractor have a firm understanding of the Builders Lien Act and the use of holdbacks?
- Is the contractor requiring “cash only” payments? In additions to concerns about tax evasion, cash only payments will make it difficult to prove how much you paid a contractor (which becomes relevant for liens) and impossible to trace the use of the funds you provided. E-transfers or cheques create a paper trail that may be important if there is a problem.
- Is the contractor willing to take the time to discuss and identify the scope of work so that you have some understanding of the work and cost involved? Fraudulent contractors often rely on vagueness to then expand the scope of work (and the amount you then need to pay). Avoid giving someone, in essence, a blank cheque to work on your property.
Contracts for Contractors
Contracts serve two key purposes. The first is obviously reducing the agreement to writing so that moving forward, the parties will have a clear understanding of what is supposed to happen and what will be paid. However, simply negotiating a contract can help both sides work through what they expect will happen and their respective obligations. Sometimes parties have a misunderstanding about how the renovation is supposed to work, and this misunderstanding leads to an avoidable dispute. Fully exploring the contract in advance is the best way to avoid those types of problems.
There are many reputable builders and contractors in the Okanagan. They will take the time to explain their contract and will discuss key terms with you. A contractor who is looking to take short cuts when discussing the contract will likely take short cuts during your build. These are some of the key red flags you can look for to avoid being taken advantage of.
Do you still have questions? Contact our Construction Lawyers for more information.
The information provided above is for educational purposes only. This information is not intended to replace the advice of a lawyer or address specific situations. Your personal situation should be discussed with a lawyer. If you have any questions or concerns, contact a legal professional.