When you hire someone to renovate your home, a written contract is a must. No projects, even a small one, should be done without one. A. Why is a contract important?
A. Why is a contract important?
To begin with, a written contract helps to protect you. It is an indication that you are dealing with a reputable renovator, not a “fly-by-nighter”. It also gives you legal recourse in case the project runs into problems, for any number of reasons. However, not all contracts are equal, and it’s important to ensure that a contract covers essential information. A good contract should provide proof that the renovator is legitimately in business—with GST registration, insurance and workers compensation, for instance.
Just as importantly, a written contract is a “blueprint” for your renovation experience. A well-written contract can prevent a lot of misunderstanding and confusion by providing clarity upfront about your project and the process. It also anticipates issues that can arise in any renovation project by addressing “what-if” scenarios and solutions.
B. What does a contract look like?
There is no single format for a renovation contract. Many companies develop their own form, while others use standard contract documents or they adapt model forms available from a variety of sources, including Canada Mortgage and Housing Corporation, www.cmhc-schl.gc.ca.
Depending on the size and complexity of the project, it can be a single document of a couple of pages, or more, or it can be a comprehensive “contract package” that includes a number of attachments—drawings, materials lists, payment schedules, and so on.
When your renovator presents a contract for your acceptance, it may be the first time you have an opportunity to review the company’s “offer” to you. Or it may be the end point of a lengthy process of discussion, design and decision-making.
Either way, it is important that you read, understand and agree with everything in the contract. A renovation project can take weeks or months to complete, and may last a lifetime—a few hours reviewing and discussing the details of the contract with your renovator before signing is a wise and prudent investment of your time. You may also want to have your lawyer review it before you sign it.
C. What should be covered?
“The devil is in the details.” When renovations run into trouble, it is often because the project was not defined well enough. The bigger the project, the more information is needed, but even a small project should be covered in detail in the contract. For instance:
- The work must be clearly described. What is involved in your project? Go through every step, and clarify tasks and expectations, including who is responsible for what. For instance, will you or the renovator dig out the plants when demolishing landscaping for an addition? What will happen to the old kitchen cupboards that are being ripped out? If you expect the renovator to dispose of them, the cost should be included in the project price. How many coats of paint in the new family room? And so on.
- List products and materials in detail. Products and materials to be used in your renovation should be itemized, by brand, type, colour, and so on. Many items come in “good, better, best quality”, and you will want to know what you are getting. Experienced renovators can make recommendations to suit your budget and project.
- Are allowances realistic? Rather than pricing out a myriad of products for a kitchen renovation or pre-selecting lighting or floor covering, many renovators use allowances. The contract price will include a set dollar amount allocated for kitchen cupboards and counters, for example, to be chosen by the homeowner once the work is under way. It’s important to ensure that this amount is adequate. The cost of features and special items can add up quickly, once you are in the suppliers’ showrooms.
- Is the process for change orders explained? No matter how carefully you and your renovator try to define every aspect of the project up front, there may be changes along the way. Often homeowners decide to upgrade or add features, as the renovation begins to take shape—after all, what better time to get what you really want? Occasionally, the work may uncover items that need repair or replacement, such as plumbing and electric systems. The contract should note how change orders will work, when they must be paid for and that they may affect the scheduling of the work.
- Day-to-day organization. How will the renovator run the work site? For instance, where will they store materials and tools? What arrangements are needed for washroom facilities? What kind of clean-up will they do each day and at the end of the project? Many renovators specify these details right in their contract.
- What if… the project is delayed or takes longer than anticipated to complete, if a product is not available when needed, if you and your renovator don’t see fully eye to eye on something…? A good contract tries to anticipate possible problems and sets out a process for dealing with them. That way, neither you nor your renovator get caught by surprise—by far the best way to keep your renovation on track.
Don’t hesitate to ask your renovator to explain anything in the contract that is unclear to you. And keep in mind that “when in doubt, put it in writing”—it is much easier to add something to the contract before signing it than to work through uncertainties later. Both you and your contractor want to start the project knowing that you have created the right conditions for success.
This backgrounder has been prepared by the Canadian Renovators’ Council of the Canadian Home Builders’ Association.