Contracts help avoid trouble contractors
Awritten contract protects you from bad contractors, but not in the way that some homeowners might assume.
For example, some people might think that just because they have a written contract, they will receive some kind of financial compensation if the renovation goes bad, or if the work is done poorly or improperly. But the truth is, a written contract is often worth only as much as what you’re willing and able to spend defending that contract in court, which in some cases could mean thousands of dollars.
And let’s say you do win the case. Trying to collect a settlement from the contractor can be a whole different ball game, especially if the contractor shuts down his company and opens a new one under a different name the next day.
So you’re probably wondering what the point is in having a written contract if it can’t fully guarantee to save you from a bad reno. A written contract can protect you from hiring a bad contractor — not necessarily from a bad renovation — because it helps you spot the warning signs before the first nail gets hammered.
The written contract can quickly tell you if the contractor you’re dealing with is a legitimate professional. For example, if the contractor gives you a contract handwritten on a napkin — as ridiculous as it sounds, I have seen it before — that’s a big red flag that you shouldn’t hire that person.
Working out the contract details will also tell you if the contractor is someone who knows his or her job well, and if the person is someone you can work with over the course of the project. If the contractor is difficult to deal with at this stage, just imagine what it would be like after they got your money.
It ’s also i mportant to have your lawyer look at the contract before you sign it, especially if it’s a big renovation worth tens, maybe hundreds, of thousands of dollars. When you’re spending that much, what’s a few hundred dollars more to make sure you’re legally protected?
A written contract can also give you key information about the contractor’s business, which could potentially save you a world of trouble. For example, a good contractor will include a clause in the contract showing proof of insurance, so if they get injured while working on your home, they’re covered by their own insurance. If they’re not covered, who’s legally on the hook? Maybe you.
The other piece of i nformation in the contract that can help you is the contractor’s business number or GST/ HST number. You can search the GST/ HST Registry to make sure that business is registered, or you can call Canada Revenue Agency’s business inquiries directly to ask if it’s a real number or if the contractor’s business/company is registered with them — because even professional- looking contracts can contain bogus information. And then there are those contractors who ask for a large down payment in cash, saying that in return you can save the taxes. Can you save money? Maybe, but is it really worth the risk? A contractor can literally walk away with your money, not having done a single thing, and you can do very little about it.
A contractor is not a contractor without a proper written contract. You wouldn’t hand your money over to a complete stranger, would you? Well, without a contract and no proof of payment, that’s essentially what you’re doing.
You also have to think what it says about the contractors who try to avoid paying taxes. They might circumvent other government regulations as well, such as acquiring proper building permits and inspections (the ones that are meant to protect you). Remember, you, as the homeowner, are legally responsible for getting the right building permits. It’s only the contractor’s responsibility if it says so in the contract. So if you don’t have them when the reno gets underway and the building department finds out, you, not your contractor, are in trouble.
A written contract is your first line of defence against bad contractors. Use it wisely and you can save yourself a lot of money and aggravation.