Get it in writing

Handshakes or verbal agreements usually mean nothing to contractors and they should be equally meaningless to homeowners. Developing a written contract is not open for discussion - as a homeowner, you are close to financial suicide if you embark on a renovation project without a written contract. What you want is a fixed-price, guaranteed completion date, written agreement.

NEVER get sucked into a "Cost-Plus" agreement - a money-pit arrangement where the contractor goes to work without timelines or cost limits. The contractor decides what to buy and what to do on the fly. That's how contractors send their kids to Harvard and homeowners to bankruptcy court. For contractors building shelters in war zones, maybe. For residential construction or renovation in Canada, never. Under any circumstances.

READ THE CONTRACT - all of it - before you sign it. Contractors have been known to bury little time bombs in the fine print. Contractors have been known to take things out, leaving you to think they're still in - shelves, for example. If you run across something you don't understand, don't like, or seems ambiguous, get it fixed, added, explained in detail or removed.

Even if the contract borders on War and Peace in word count, itemize absolutely everything you expect to have done. Ever tried to remove dried latex paint from a stainless steel kitchen sink? Put that in. Contractors sometimes like to leave behind unused heating ducts, pieces of wood and other detritus, usually tucked away in the darkest corner of your basement. You'll want him/them to remove it - all of it. Put that in, too. Don't forget the completion date. And you're fully entitled to put in a penalty for each day he's late. We know a contractor who recommended $300/day (a good idea, but when he ran late, he refused to honour it - a transgression headed for Small Claims court) . Insist that copies of all building inspection reports be provided promptly. Some contractors get bad reports and keep them from the homeowner. Insist on a warranty of at least two years, materials and labour.

Building permits should be obtained by the contractor. There are several reasons for this, not the least of which is that if his project gets shut down by a building inspector for any reason, he doesn't get to point fingers. It's all on him, and he'll need to hustle to fix whatever needs fixing. Whether or not you want to extend the completion date is up to you, but unless you're on extraordinarily good terms with the contractor we would suggest holding his feet to the fire. Also, watch out for any contractor who says you don't need a permit. We know of one who said a $50,000 project was "mostly cosmetic" and didn't need a permit. For failing to have one, he got shut down for a month. To see if you need a permit (in Halifax), click here. Any reno project valued over $5000 needs a permit.

If you're going to have any electrical work done, your contractor may need to subcontract to a licensed electrician, who may need to get a wiring permit from Nova Scotia Power. You may also need a licensed plumber if you're tinkering with the water works. Check with the Development Services office to find out for sure.

In many jurisdictions, when the contractor shows up at the permit desk they'll verify that he's licensed or otherwise approved to work as a contractor. That kind of safeguard doesn't exist in Nova Scotia - yet.

Ensure that the contract is uniquely identified, as with a serial number - the same number should appear on every page. (This is your evidence that every page belongs to the same contract.) Each page should also be numbered in sequence. For every change, however small, which involves extra cost, however small, have the contractor write up a Change Order with a DETAILED description of the work and the cost, put the contract number on it, date and sign (by both parties) and make sure your copy of the main contract has a copy of every Change Order in its folder. Most contractors have - or should have - boiler plate forms for this purpose. Each change order should be identified as Appendix A, Appendix B, etc. The importance of schedules, milestones, and payment schedules is discussed below. If a change order results in extra time needed to complete the project, the details should be included in the relevant change order.

NEVER agree to cash payments. If your contractor wants a "certified cheque" (some people still do that), give him your usual personal cheque and tell him to find the nearest branch of your bank, pay the $15 fee and get it certified himself.

Contractors love the phrases "out of scope" or "it's not in the contract." You may have had a discussion at some point in which a verbal commitment was given that shelves were going to be put in at a certain location, but when the time comes to look at the finished product and the shelves aren't there, the contractor will probably ask you to show him where the contract stipulates shelves. Not there? Sorry, no shelves.

The contract should clearly outline a schedule of payments and milestones - kitchen finished, bathroom finished, etc. - and they should be tied to each other. You can be assured that the contractor will not cut you any slack in making the scheduled payments. It works both ways, though - the milestone has to be completed on time. If he wants to be paid on time and has to bring in 10 people to work 24-hours/day to make the milestone, that's his problem. Don't forget that this is a fixed-price contract - if he incurs extra costs, he has to eat them. You might remind him of the $300/day late completion clause at this point. When milestones slip, they tend to accumulate and you may be heading for trouble. Don't forget to withhold 10% from each payment for the Lien Withholding Fund as discussed earlier in the Builders Lien Act. The only time a schedule change should be tolerated is if it was previously allowed as spelled out in a change order.

In setting up the schedule, you should include time for obtaining the necessary permits. It's also prudent to attach a milestone and progress payment schedule to having the permits in hand.

Make sure that copies of his liability insurance and workers compensation coverage are included - and current.

Have the contractor provide his HST #. Call the Canada Revenue Agency at 1-800-959-5525 and give them the number. They will confirm - hopefully - that the number actually belongs to the contractor you're negotiating with. If it turns out the number belongs to General Motors, you'll know you're being scammed. Check with Registry of Joint Stocks to verify that the company or partnership is still active (there are no sole proprietorships in NS) - collecting HST for a non-existent or dissolved company is a no-no. Reno contractors have been known to use someone else's HST number, and then collect the 15% but keep it for themselves. Few things make the CRA angrier. CRA even ran a series of TV ads a few years ago, warning against crooked "cash under the table" contractors.

It's unlikely that a contractor does not have an HST # - any business grossing over $30,000/yr has to have one. Be wary of anyone who says he doesn't have one for any reason.

Having a written contract does not protect you from a dishonest contractor - he, or anyone, can still slap a lien on your house for any amount he chooses. A common scam is to claim that you made him perform extra work. It's his word against yours, but if there's a thorough contract in place, the absence of a change order tilts the situation in your favour. And when it works its way into court (if it gets that far), having a written contract is going to make a satisfactory outcome a lot more likely than if there is no contract.

NEVER hand out keys or allow a contractor to bring tools or materials into your house until the contract is signed. When the project is finished, change the locks. Some contractors will make copies of keys and hand them out to anybody who asks for one. You'll never get them all back.

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