Wednesday, August 15, 2012

Handshake Renovation?

"The days of “handshake agreements” are long gone, folks," Mike states boldly in this column, reposted from the National Post. When hiring a contractor, everything should be put in writing. If something changes and additional work (or money) is needed, the revisions should be put in writing and both the homeowner and contractor should sign off on it. There are no exceptions, really. Doing business the old fashioned way on your word with handshake is a great way to turn friends in to enemies, or even worse, litigants, so make sure you document, document, document! Mike encourages homeowners to ask questions as their contractors work, respectfully of course. Ask him why he's doing what he's doing, and document his explanations. Taking pictures is also a smart way to protect yourself and document problems should they arise. Mike encourages homeowners to work out a payment schedule, based on milestones, and get it in writing. After this is completed, you get this amount of money, and so on and so forth as the job progresses to completion. Lastly, Mike explains that "Contracting isn’t an exact science, but good contractors try to get it as close to one as possible."

Mike Holmes: Handshake renovation?

Mike Holmes | Mar 19, 2012 8:00 AM ET | Last Updated: Mar 19, 2012 9:12 AM ET

Alex Schuldt / The Holmes GroupMike Holmes discusses a contract with homeowners.

You’ve hired a contractor for a three-month renovation. Two months later, your home still looks like a demo site. The contractor tells you the renovation is actually going to take six months to complete. And the kicker? He’s going to need another $80,000 to do it. What do you do?

Unfortunately, this scenario isn’t uncommon — and I have the emails to prove it. But the most important thing you need to do if you think something’s not right is address the problem head-on. And the sooner, the better.

There are a lot of reasons why homeowners run into problems with their contractors. But 90% of them come down to one of three things: additional costs, a breakdown in communication or unmet expectations.

Hoping it will resolve itself never works. You need to talk to the contractor before things snowball into bigger problems. Because bigger problems are more expensive to fix.

As the contractor works, you should ask questions. If you’re respectful in how you ask, the pros won’t mind. They want you to know why they’re doing what they’re doing, and how it’s going to make your home better. Take notes and date them. Be sure to document your conversation, and the contractor’s explanation.

Documentation during a renovation is just smart. Take pictures of everything — plumbing, electrical, framing, insulation, floors installation. So if there’s a problem, you can show the proof to a pro.

Last week, I got an email from Fred, who lives in Victoria. He paid his contractor for plywood that was never delivered, and downpipe that wasn’t installed. He wanted to know when a problem with a contractor becomes a criminal matter.

Most cases against contractors are civil, not criminal. If it can be proven that a contractor has committed fraud, it becomes a criminal matter. But proving this is difficult and expensive, especially for homeowners who have lost a lot of money due to a botched renovation. It’s an uphill battle the whole way. There are too many loopholes. A bad contractor can claim bankruptcy and open shop under a new name the next day.

Some contractors will tell you they need more money to get the job back on track. But when the contractor needs more money to finish the same job, but no additional services have been added, alarm bells should go off. Maybe he’s inexperienced and didn’t quote the job properly, or maybe he gave you a low quote, just to reel you in. Either way, he isn’t any good.

Don’t show him the money. Because the second he gets it, he’ll be out the door and on to the next job. Sometimes keeping your money in your pocket is the only leverage you have.

In some cases, these problems are the contractor’s fault. In others, they’re not, such as the homeowner changing her mind. Bad weather or problems with neighbours can cause unexpected delays or additional costs. But these are out of the contractor’s control.

No matter what, as a homeowner, you need to do your homework. That means looking through the contract you made with the contractor.

The contract is the be all and end all, if things start to go badly. That’s why I always say you need to put everything in the contract, including all your expectations, such as start date, finish date and the consequences of going over the deadline.

It should also have a payment schedule that’s tied to completed project milestones, and a termination clause listing all the reasons that give you the right to pull the plug on the job.

All is fair — if it’s in the contract.

By now, I hope most homeowners know they need a written contract if they’re hiring a contractor. The days of “handshake agreements” are long gone, folks.

A person may be as good as his word, but a contractor needs to put it in writing. Even if it’s “a friend of a friend” (especially if it’s a friend of a friend). Both the homeowner and the contractor are better off. Why? Because a contract protects them both.

Contracting isn’t an exact science, but good contractors try to get it as close to one as possible. If they have experience, they’ll be able to anticipate problems and know ahead of time what needs to get done and when to keep the job on track.

And if something comes up that throws everything off, a contractor doesn’t wait for the homeowner to ask why. The homeowner is the first person he calls, the moment there’s a change to the plan that results in additional costs. And sometimes, he’s justified: Maybe, when he started digging the foundation, he discovered it needed repair. Or he found mould or asbestos. These are justified additional costs.

A good contractor will set up a change order, have you both sign off on it, and then give you a revised schedule, along with the revised bill. After that, there’s no more room for delays or additional costs.

Bottom line: It’s about mutual respect, because the fact is that your contractor and his or her crew are going to be a part of your life for some time. So it’s worth the effort to get along. When you talk to your contractor, be specific about your concerns. Be direct and respectful. Both will help keep things moving forward.

Catch Mike in Holmes Inspection, Thursdays at 8 p.m. on HGTV. For more information, visit For more information on home renovations, visit

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