The Home Renovation Planner
Contractor Payments:
In most cases you will not need to pay anything up front but if you are installing special equipment like appliances, hot tub or custom wood work, etc. then you may be expected to pay a good portion to show your commitment. Avoid paying cash. Contractors that ask for cash are probably trying to avoid taxes or something which demonstrates dishonesty and should be a major red flag for you. Be sure to make payment with a cheque and to the correct person of the company and always get a receipt at the payment moment. Make sure payments are clearly spelt out in the contract. See section 6, Financing for more details on financing and the tax advantages regarding your home improvement project.
This is a portion of the actual Builders Lien Act in BC. (See Section 7, Resources for more detail) It states that 4 (1) The person primarily liable on each contract, and the person primarily liable on each subcontract, under which a lien may arise under this Act must retain a holdback equal to 10% of the greater of :
(a)the value of the work or material as they are actually provided under the contract or subcontract.
(b)the amount of any payment made on account of the contract or subcontract price.
***This hold back is some added consumer protection and you should check with your province or state for amount and the time allowed to hold back. Do not make final payment or sign a completion document until you are completely satisfied and all the work is complete and all equipment is working properly.
Definitions key to discussions: