Home renovation is stressful. It is also a major part of almost every homeowner’s life. Whether individuals are looking to improve their place of residence, hoping to build their dream home, or spruce up an investment property, the goal is always to increase the value of property and improve people’s quality of life. During any renovation project, a homeowner must expend significant time and monetary resources. Construction project often involves sacrificing personal comfort and enduring disruption to everyday life. As such, before embarking on any construction project, every homeowner should consider these major points (the list for which is not exhaustive):
1) Budget, Cost Overrun, and Payment Schedules
Whether a project is commenced on a fixed price, costs-plus, or time and materials basis, every homeowner must have a clear figure in mind insofar as construction budget is concerned. It is crucial to communicate this budget to the professionals conducting renovation services on one’s home. It is similarly important to communicate the intended scope, quality, project management, and time period for services to be completed to avoid cost overrun.
After all of this, it is also important to note that – even if you have a fixed-price contract based on a quote – the Consumer Protection Act, 2002 allows contractors to increase their associated/quoted price by a maximum of ten percent.
Lastly, and once a project starts, it is important to remember that homeowners are subject to holdback obligations under the Construction Act. This means that – from every payment made – a homeowner must hold back ten percent of the amount to be paid. This is the law and cannot be re-negotiated or excluded from a payment schedule to a construction contract. It also cannot be postponed to the very end of the contract (i.e. contractors will try to say that you will pay 10% of the contract by the end). The purpose of holdback is to protect subcontractors in the event of non-payment by a contractor. Many homeowners find a rude awakening that, even though they may have paid a contractor in full, a subcontractor’s lien may require them to pay that further ten percent of holdback.
2) Timelines and Project Delays
Homeowners are hopeful and eager to see their projects come to life. Unfortunately, most home construction and renovation projects take more time than originally planned. This is sometimes justified due to delays in supply and shortage of labor, delays in permitting issues, or weather and other conditions creating an unsafe work environment.
Planning for possible disruptions and adding buffers at each construction stage, as well as coming up with a “Plan B” for renovators/suppliers will help stick to the project timeline and to deal with the time delays. More importantly, at the time of negotiating contracts, it’s important to have a clear deadline for substantial completion. Once this date is identified, it is equally important to include a daily liquidated and identifiable cost for each day of delay past this date to incentivize the contractor to stay on top of the project.
3) Quality
This is one area where people often need to take a reality check. Unless you’re paying millions of dollars and your contract explicitly reflects that the standard of construction is to be akin to that of a renaissance palace, homeowners need to accept that the standard of construction is compliance with the Building Code and the Tarion Performance Guidelines. This means that, even though you may see hairline scratches/cracks, or other imperfections, that does not mean that your project is horrid and incomplete.
Connecting back to budgeting, it is important to note that cost and quality are tied hand-in-hand. With the current economy, inflation, and the growing prices of materials and labour, costs of construction are not the same today as they were ten years ago. One must also remember that you get what you pay for. Hiring someone who can “do it for cheaper” means receiving lesser quality of work and potentially spending even more money fixing those mistakes down the road.
Namely, poor quality of materials or labour can affect the overall quality of the project, which results in further time delays, cost overrun, and personal frustration. When deciding which contractors to hire, homeowners should take time looking into their competency, level of experience, reviews from prior projects (look at their social media or ask for them to provide proof of prior projects). This will help ensuring quality and timely delivery of the supplies and labour, and further confirm the quality of contractor’s diligence to timely communicate any updates and potential issues.
4) Regulatory Roadblocks
Ontario has a strict regulatory framework when it comes to residential construction. Obtaining permits for electricity, plumbing, protection zones, etc. along with inspections and zoning regulations can take a lot of time, money, and energy in following up with the approvals.
A homeowner should ensure that these responsibilities are property delegated and that the right individuals are in charge. Remember, even if a contractor is the party identified as being responsible for obtaining and complying with these permits, individual homeowners may also be liable if construction is undertaken without proper permitting or not complied with properly. These non-compliances can result in delays, costs of inspections, insurance voiding, administrative fines, and legal proceedings.
Most Important Takeaway
Any homeowner embarking on a renovation project should keep the above-noted and more in mind before signing any documents or beginning any project. Consulting with a construction lawyer beforehand will significantly reduce the stress, As we can see, hiring the right contractor is a crucial part of alleviating the stress associated with having a construction and/or renovation residential project. We can explore discussing some strategies on how to find a good contractor for your residential construction project in one of our next postings.
The foregoing is for informational purposes only and should in no way be relied upon as legal advice. If you have any further questions, or would like to schedule an appointment for legal advice tailored to your circumstances and business, please contact me at dan@fridmar.com.
