The renovation contract

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Written by Administrator

Wednesday, 06 May 2009 18:36

A written contract is the basis for a good working relationship between the homeowner and the professional renovator. The contract ensures that the two parties are agreeing to the same thing, and it clearly outlines the responsibilities of each party. The complexity of the contract will vary according to the scale of the project, but most contracts will contain the standard information outlined below.

Contract parties

Identify the parties to the contract including addresses and phone numbers. The contract names the people involved in the agreement (i.e. you and the renovator).

Contract documents

The contract should identify all documents that make up the contract. Attachments should include plans and sketches of the work to be done, specifications describing in detail the work that includes a list of the materials to be used (colours, materials, thicknesses, brands and models where applicable), and a copy of the renovator's insurance policy. (The renovator should carry at least $1 million general and automobile liability insurance.) Also attach a Workers' Compensation Certificate which will serve as proof of up-to-date workers' compensation.

A description of work.

This should outline both the work that will be done under the terms of the contract, and also the work that will not be done. If the homeowner will be responsible for certain items, these should also be listed.

Contemplated start and finish dates

These are generally accompanied by a brief paragraph indicating that the renovator cannot be responsible for delays due to unforeseen occurrences, changes made to the work plan and so on.

Payment schedule

This outlines the required deposit, and how and when the remainder of the contract will be paid. The renovator may invoice once a month, at specific milestones (upon completion of a specified portion of the work) or at the end of the job. Ideally, a balance is struck where the homeowner pays only for services rendered, and the renovator gets paid as soon as possible for those services.

Holdbacks

Under the Construction Lien Act, holdbacks protect you against any subcontractor who might place a lien against your property to obtain payments that may be outstanding from your renovator. In Ontario, ten percent of each payment must be held back, with the holdback monies paid to the renovator 45 days following completion of the work.

Extras and deletions

Change orders are drawn up when changes are made to a project in progress, describing additional work or materials (extras) and/or items dropped from the work plan (deletions). They also indicate how the contract price or project schedule is affected. Change orders must be signed by both parties and should be paid for as the changes occur.

Contingencies and allowances

Sometimes your renovator may not be able to gauge exactly what is required until the work is in progress; by including a contingency clause and amount, the renovator will not have to quote a high price to protect him/herself. Allowances can be applied to specific items, such as flooring, light fixtures or kitchen cabinets, where the quality and product selection is at the discretion of the homeowner. Anticipate to spend 10% to 15% more than the original contract value by the time your renovation is complete, so budget accordingly. You may decide on changes after the work has begun, or problems impossible for a skilled renovator to anticipate may arise.

Standards of work

The renovator is responsible for protecting your property and your neighbours' properties, and for ensuring regulatory compliance. Standards of work also describes how the work will be carried out, and who is responsible for daily clean-up to maintain the liveability of the home.

Warranties

The standard manufacturer's warranty for materials is usually one year. In addition, professional renovators generally offer a warranty on the products and services they provide. The contract should specify exactly what is covered, for how long, and what will be done if a problem arises.

Other contractors

The renovator's responsibility for hiring or coordinating the services of other contractors will be noted. You are not responsible for monitoring other contractors hired by the renovator. A representative from the renovator's firm should be present whenever sub-contractors are at your home.

Permits, inspections and approvals

The contract outlines who (you or your renovator) is responsible for getting the required permits such as building, plumbing or hydro permits, and arranging for the required inspections. An addition to your house may require zoning approvals or what most municipalities call "site plan approval". (Keep in mind that you, the homeowner, are ultimately responsible for complying with municipal regulations.)

Use of facilities and utilities

Access to water, electricity, telephone, washroom and storage as required for the job should be outlined.

Signs

Many contracts stipulate that the renovator will be allowed to display a promotional sign on your property while the project is in progress.

Disputes

It may be a good idea to name a third party who will mediate if a conflict should arise that you and your renovator cannot resolve. Finally, read the finished contract over carefully. It is a good practice to have your lawyer read it over before you sign on the dotted line. The GOHBA has produced a renovation contract for use by its member renovators and homeowners.

Last Updated ( Wednesday, 08 July 2009 16:38 )