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Hiring a general contractor? Know the ins and outs of contracts

Imagine hiring a contractor for a home renovation. You pay them a deposit, but the work doesn’t get done. In fact, the project never even starts. Two years ago, a homeowner hired a contractor to replace tile on a front porch. A deposit was provided and the contractor didn’t fulfill his duty. The homeowners sought out justice.

The Facts

Ontario’s Consumer Protection Act protects homeowners who have been scammed by contractors by fining up to $250,000 for corporations and $50,000 for individuals convicted of offences under this act, while ensuring offenders pay compensation to the victims.

What does this all have to do with home renovations?

When the homeowners in question filed a complaint against the contractor in question, Consumer Protection Ontario found issues with the way the contractor handled the situation. His actions were in direct violation of the Consumer Protection Act (CPA), according to Canadian Contractor.

The act stipulates that contractors cannot accept deposits that exceed 20 per cent of the value of any consumer agreement until the goods or services construction contractcontracted for is completed. Not only that, but the contractor provided the homeowners with a contract that did not comply with regulatory requirements under the CPA. Therefore, the contractor was convicted of one count of the following charges under the act:

  • Engaging in unfair practice by making a false, mislead or deceptive representation to a consumer;
  • Failing to provide consumer with a contract containing information required by the CPA;
  • Failing to refund payment within 15 days of being given notice of cancellation of agreement.

The contractor was fined $2,500 and ordered to pay the homeowners $1,200 – their initial deposit.

Please note: This does not mean you should be afraid of doing home renovations forever! All this does is provide you with the knowledge you need about contracts before you hire a general contractor. Check out our directory to read reviews homeowners like yourself have written about contractors before you hire one!

Hiring a general contractor? Here’s what the contract should include

Contracts exist for a reason. In the home renovation and improvement process, a contract must be provided to a homeowner to protect them and the business entering the agreement. According to the CPA, a contract must clearly indicate the following:

  • It must show the terms of your agreement with the business;
  • It must include all fees and charges and stipulate what they are;
  • It must include details on how to proceed in the event that a homeowner changes his/her mind about the agreement in question.
The #1 rule of any contract: read the fine print!

The #1 rule of any contract: read the fine print!

Pricing and contract adjustments

If a written estimate is included in the contract, then the CPA advises the final price cannot be more than 10 per cent above the estimate unless a new price is agreed upon and the new price is changed and signed on the contract. If a homeowner is charged more than 10 per cent, they have the right to demand the final price be adjusted.

Should a contract be changed at the contractor’s request, they must provide a homeowner with a notice of change – whether that’s to renew or extend the contract.

Under the CPA, a written notice should include the following:

  • All proposed changes to be made to the contract;
  • The date the changes will be effective;
  • What would happen if the homeowner fails to respond to the change.

If these rules are not followed by the contractor or business, then the contract becomes invalid and you as the homeowner are not required to pay the charges and fees that are a result of invalid changes to the contract.

Even if you're under contract, you're still protected.

Even if you’re under contract, you’re still protected.

Cancelling a contractcancelled

As a homeowner, you have the right to cancel a contract under the following circumstances:

  • If the contractor has misrepresented their goods or services;
  • If they have billed you for services that were not requested or are different from what was agreed upon in the contract.

Final Lessons

A contract protects your needs when renovating your home. Therefore, it’s important for a general contractor to not only provide you one, but that you read it over very carefully to ensure any consistencies.

Home renovation scams shouldn’t deter you from doing home renovations or improvement projects. When it comes to hiring a general contractor, it’s important to read reviews written by homeowners like yourself so you can be sure you’re making the right decision when hiring someone.

We have an extensive directory of general contractors with lots of reviews. They’ll guide you in your decisions.

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