Starting Home Renovations – Hiring a Contractor
Things to be Aware of in Construction Contracting
Feb 25, 2009
When you hire your renovations contractor you need to aware of several issues and to be able to make sure you are getting the best deal for your money. And that you are actually getting a deal! There are enough shady characters in the business that it has given contracting a bad reputation. So here are some to help you find the best one for your money.
Licensing and the Contractor
Make sure that the contractor is registered to do business. In some States they may have to show you their business license, whereas in Canada being registered for a GST number is usually demonstration enough, depending on the municipality.
You may also want to see if the contractor has the necessary trade certificates, depending on what you are renovating. In most places a plumber must have a journeyman’s qualification simply to get the permit necessary to do the work. The same may be so for electrical work. Most other trades do not require certification to do home renovations, but a certified tradesman is more likely to give you quality work.
Reputation Counts
Was the contractor recommended to you by someone you trust? If so, then they are probably reliable. This doesn’t’ mean that you shouldn’t still cover yourself with proper contracts and due diligence, as even your best friend or neighbour can make a mistake. Is the company known by the Better Business Bureau or Chamber of Commerce in your area? Or are you hiring a single person to do all the work? Can he provide references? Do the references check out? Make sure they’re not his buddies just posing as past customers.
If you can, go see some of the work that has been done before. This can give you an idea of the quality of work and you can ask the people directly how they feel about the work that was done and what it was like to work with the contractor.
Never Pay Up Front
Some contractors will ask you to pay up front. This is not the recommended way to deal with a contractor. In the case when the contractor needs the materials to be bought ahead of time, then you can simply pay for these yourself. Many suppliers will deal with the home owner directly and are happy to charge the expenses to you. Perhaps your contractor wants to make a mark-up on these in order to pay for his expertise and time in making sure they are chosen correctly. That’s fine, but make it part of your contract and pay him after the materials are delivered and paid for.
As for the labour component, you should only be paying the contractor for work that is completed. It can be part of the contract, if you so stipulate, that the contractor gets paid on a percentage of completion basis. This means that if he is 25% complete, then he gets paid for 25% of the contract. This is usually done in those contracts that take a few months, such as complete basement development or an addition.
Some contractors worry that the client won’t have the money to pay them. And this is a legitimate worry. One way around this is to set up an amount through your lawyer in trust for the contractor. Then the contractor has to get the money from the trust account and apply to the lawyer for the payments. Of course this will increase your costs, but on large contracts it may be worthwhile. There may be other ways you can do this through your bank or another trusted advisor. It never hurts to ask.
Get Everything in Writing
This can’t be emphasized enough! Every little change and every little mistake should be documented. It only costs more if you don’t. Somebody has a misunderstanding on something and it leads to litigation, making it a pain. Don’t deal with that! If everything is in writing, then these things are avoided right from the start.
And always note that when a contractor deals with you, you should have a professional contract that isn’t biased towards the contractor. You can download a sample contract from Owner Builder Help (or get it directly).
All the best in your new renovations!
