What should be included in my written contract with a contractor?

When hiring a contractor for a larger home renovation, it’s important to get everything in writing. The Canadian Home Builders’ Association recommends that your written contract should include the following:

• The parties to the contract (e.g. you and the contractor), including street addresses, telephone and fax numbers, email addresses and the contractor’s business or GST number.
• Addendums. The main contract must also identify all attachments that are part of the contract, such as:
  • Drawings/blueprints/plans
  • Specifications: description of work and a precise list of materials and products (e.g. types, brands, grades, thickness, colour, model)
  • Other documents signed by both parties in the course of the contract (e.g. change order forms)
• Description of work to be done by the contractor, as well as work not to be done under the contract, or to be done by you or others outside the terms of the contract.
• Start and completion dates often include a statement indicating that the contractor cannot be responsible for delays due to circumstances beyond the contractor’s control (changes to the work, adverse weather conditions, etc.).
• Terms of payment set out the total amount of the contract and a payment schedule: deposit upon signing the contract; how and when the remainder will be paid (at regular intervals or specific milestones), and the treatment of taxes.
• Holdbacks are a provincial legislative requirement that protects you against subcontractors who may place a lien on your property in the event the contractor doesn’t pay them. On each payment you make to your contractor, you must hold back a certain percentage for a specified length of time.
• Changes in work once the building or renovation project is in progress (also called extras and deletions) must be written up as “change orders,” signed by both parties and attached to the contract. Any change to the contract price and schedule should be clearly noted on the order.
• Allowances refer to a lump sum in the contract price, allocated for items to be selected directly by the homeowners, such as flooring, fixtures or cabinets.
• Contingencies refer to an amount set aside to deal with the unexpected or items that the contractor cannot gauge accurately until work is in progress. If not needed, you won’t be invoiced for it.
• Standards of work describe the contractor’s commitment to performing the work in accordance with the contract documents and in a diligent and workmanlike manner with minimum inconvenience to your household, to protect your property as well as neighbouring properties and to comply with regulatory requirements. Includes responsibility for daily clean-up.
• The contractor’s liability insurance and workers’ compensation coverage must be paid up to date and proof of coverage provided and attached to the contract.
• Municipal and/or utility permits, inspections and approvals are usually arranged by professional contractors as part of their service (note that homeowners are ultimately responsible for complying with these regulations). The contract should specify who is going to obtain them.
• The contractor’s warranty describes what is covered and for how long. It should include a statement of the contractor’s intent to hand over manufacturers’ product warranties to you upon completion of work.
• Subcontractors scheduled to work on your home may be listed.
• Use of facilities and utilities should be outlined-water, electricity, washroom and storage for materials.
• Signage. A statement that you will permit the contractor to display a promotional sign on your property during the project.
• Dispute resolution in the event of a conflict – may include the name of a third party arbitrator, or state that both parties agree to binding arbitration.

Fill in any blank spaces on the contract with N/A (not applicable), strike out anything you don’t agree with, and make sure that you and the contractor initial any changes. Don’t sign the contract until you have reviewed it and are fully satisfied. You may wish to consider having the contract reviewed by your lawyer. If the deal sounds too good to be true, it might be.

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