What You Should Know About Paying a Contractor Upfront in Canada
Hiring a contractor to renovate or repair your home is a significant investment. One of the most important aspects of hiring a contractor is determining how much to pay upfront. While it’s important to show your contractor that you’re committed to the project, you also want to protect yourself from potential financial risks. Here’s what you need to know about paying a contractor upfront in Canada.
-Payment Schedule in Your Contract
Before any work begins, your contractor will request a down payment to secure the job. However, the down payment should not exceed 10-20% of the total cost of the job. Homeowners should never pay a contractor more than 10%-20% before they’ve even entered their home. A reputable contractor will understand and respect this and will include a payment schedule in the contract that outlines how payments will be made throughout the project.
-Payment for Milestones
Milestone payments are a common method of payment for larger projects. These are payments made to the contractor after specific milestones are met, such as the completion of framing, electrical, or plumbing work. Milestone payments keep the project on track while also ensuring the contractor is paid for the work they’ve completed.
Holdback payments are also common in Canada. A holdback payment is a percentage of the total contract price that is withheld until the project is completed to the homeowner’s satisfaction. The holdback payment is typically 10% of the contract price and is intended to protect homeowners from incomplete or unsatisfactory work.
When it comes to paying a contractor upfront in Canada, it’s critical to include a payment schedule in the contract that protects both the homeowner and the contractor. A down payment of no more than 10-20% of the total cost of the job is typical, with milestone payments made as specific stages of the project are completed. Holdback payments are also common in Canada and can provide additional protection for homeowners. Remember, it’s critical to work with a reputable contractor who honors your payment terms and delivers quality workmanship on time and within budget.