Think carefully before paying a contractor up front

Monday Nov 06th, 2017


You've decided to get going on your dream renovation and worked out the details with a contractor. Now you're anxious to get the work started. But the contractor wants half the money up front. What should you do?

Think very carefully before paying. Then think about finding a different contractor.

Outside of specific circumstances — such as pre-ordering high-value custom products that cannot be returned, paying for permit fees, road cuts, tree removal, building demolition, or moving hydro wires — down payments for work not yet completed should never amount to much more than 10 per cent of the total cost. If your contractor is providing design services separately from renovation services, these may also need to be paid for prior to the construction work starting.

Reputable reno professionals shouldn't need your money to finance their business and should bill you in proportion to what has been completed. A deposit serves mainly to confirm your good faith commitment to the project, as set out in your contract.

If a contractor wants most or all the money up front (and often in cash), they may be running an under-the-table operation, cheating on their taxes, skipping building permits and proper business insurance — all of which put you at risk. These are situations where fly-by-night contractors may not do the work promised and the homeowners may never see their money again. And without a written contract, there will be almost nothing they can do about it.

Most renovation contracts, particularly for larger projects, have a clear payment schedule laid out that ties payments to progress milestones, so you pay an amount proportionate to the percentage of work completed. That's fair to both you and the contractor. Small jobs may only require a small deposit and full payment upon completion. In no case should you have to pay a large percentage or all of the costs before the work is done.

For consumers, the key to renovating the smart and safe way lies in being informed about how the renovation business works. You can find a wealth of practical information from the Canadian Home Builders' Association at

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