Ask Jon Eakes

Last Updated: Wednesday, June 1st, 2011, Created: Friday, February 1st, 2002

The Business of Renovation -- Part 2 -- The Contract

Should you have a contract or not for every renovation? According to David Foster, author of the pamphlet Get It In Writing, except for the simplest of maintenance tasks, you need a contract, and for a lot of reasons that you may have never thought of.

The contract for a renovation project actually has three parts to it: the contract itself that states everything that both parties agree to; the plans if there is construction involved; and written specifications that detail the colours, types, models even the quality of everything that is going into this renovation. The absence of a set of specifications is often the starting point of problems in a job where the homeowner expects one thing and the contractor delivers another.

The contract must be signed before the work begins. The parts that you are used to seeing in a contract will describe the agreement (what is going to be done), who will do the work, when it will begin and when it will finish, cost and payment method. Good so far.

Probably one of the most important parts of a contract, the part that is missing when there is no contract even if there is a very good relationship between the owner and the workmen, is Risk Protection. The contract should contain proof that the contractor is in good standing with your provincial Workman's Compensation and that they have liability insurance to cover all eventualities. If the people working on your house do not have this kind of Risk Protection, you are automatically considered a general contractor and you are personally liable for all damages and any injuries. In theory you should register as a contractor and pay workman's compensation. Understand what Workman's Compensation really is. It specifies just how much will be paid for any job related injury, and most importantly, limits your liability to that payment. Without it, an injured individual that you allowed to work on your property can sue you for everything you own if he injures himself. The contract should include his liability insurance policy numbers as well as his workman's compensation registration and you should call both to verify that they are valid. Failing to do this could cost you your home, even when the work was just installing a window.

A written warranty should be right in the contract. If it is not in the contract, you do not have a warranty.

Cash deals may save you a little money, but they could cost you your future because a cash deal will never remove your liability for anything that could go wrong, and your homeowner's insurance will probably not cover the problem either.

It is worth taking a look at the booklet: Get It In Writing, or the The Renovation Roadmap.

If you would like to read the other two parts of this series, click "here".

Keywords: Construction, Contractors, Damage, House, Plans, Protection, Quality, Renovation, Warranty

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