As a contractor, do you generally offer your customers the option of paying in full AFTER inspection? If so, how much is held back?

Question Icon
Posted by: from Oakville
3/24/2011 at 5:25:42 PM

I find as a consumer and a recent recipient of various services for building my home, there are far too many variations on the way that a contractor sets payment schedules.

Is there a standard, or a regulation that helps protect consumers?

IS it regulated at all? I was told it wasn't, so my next obvious question is, why not?

User Icon
Date/Time3/24/2011 at 11:19:02 PM

Hi Christina,

To answer your question, yes there are regulations that help protect consumers in Ontario, but there are not a lot of them. The most commonly upheld regulation is a hold back that the customer keeps until after the job is completed. The basic hold back in Ontario is 10% of the total project cost, and is released after 45 days from substantial completion of a project. This is most common in commercial, Industrial or large residential projects. Outside of that the sky is the limit for payment structure.

There are many reasons why payment structures vary. The size of a job is often a large factor, as bigger jobs will require payments as the project progresses, where as it would seem silly to hold back 10% of a $200.00 job or to bill it in increments. The amount of materials needed is often another factor or how well the contractor knows and trusts you. If the contractor is hiring sub trades then often payments will be made after certain stages of the project are completed, as the contractor will need to pay his sub trades.

All in all it can be a confusing world of payments and paper work. What really matters is that the contractor doesn't ask for too much money too fast, and that they do a good job in the end. I hope you find this somewhat helpful.

Joe Bartley,

Jospix Construction

User Icon
Date/Time3/25/2011 at 6:47:15 PM

Joe gave a great answer. Just to add a a consumer it is often difficult to understand where the contractor is coming from. If you are not using a GC or are acting as the GC yourself, you will find each trade will operate under different conditions. Be wary of trades or contractors that want it all up front. Most, if not all contractors work on a 30/60/90 day credit cycle and of course they have to pay their personnel every week or every two weeks. Regardless of the contractor, if they are good, they may have numerous jobs on the go and that will stretch their availability to credit or their cash-flow from a LOC.

I always recommend going with a GC for your large projects. That way you only should have to deal with the GC and not any of the sub-trades.



John Kuehnl-Cadwell

Datawise Solutions Inc

User Icon
Date/Time4/4/2011 at 3:51:16 PM

Hi Christina,

As a General Contractor, I know there is no regulation for the payments between a client and a GC.

What a client can ask for, or even demand is the 10% holdback for 45 days. Other than that, it is up to the client and the GC to come up with a payment plan that is agreeable between the two parties.

A good, and reputable GC should be willing to work with the client to come up with such a payment plan.

You should never give more than 10% to start a job. There should be as many milestones as you see fit, to insure that the work gets done properly, without the risk of the contractor leaving before the job is completed.

I always work out a payment schedule that the client is happy with, as I know I will get paid for my work in due time, while giving the client the piece of mind that I am not in it for the quick buck. In the end, referrals mean more than the profit from one job.

Hope this helps,

Bill Clawsie

Clawsie Contracting

User Icon
Dave in Oshawa
Date/Time4/11/2011 at 11:33:51 AM

All excellent answers, but I disagree with 'no regulations'. The Construction Lien Act is the piece of legislation and as I understand it, all construction projects are covered regardless of size or contract amount. That's where the requirements for 10% and 45 days comes from. But as was pointed out above, it really depends on the size and scope of the job and what is prearranged in the terms of the contract.

I think where most contractors get annoyed is when the 10% hold back is used as leverage against warranty defficiencies. The Construction Lien Act (again, as I understand it) was not intended for this purpose, it is supposed to be used to ensure all subtrades are paid within 45 days of their *substantial* completion of work. If the work is complete, then you must release the holdback or the subcontractor can lien the property.

So do you use the 10% holdback on small jobs? In my opinion, it's not worth the paperwork and hassel. If the job is done and everyone is reasonably happy, then complete the payment. If the relationship between homeowner and contractor was reasonably friendly, then warranty work shouldn't be an issue. A hold back at the end of the job - especially if the contractor wasn't expecting it - can sour that relationship pretty quickly and he may have little interest in completing any outstanding work.

Hope that helps!

User Icon
Date/Time4/12/2011 at 3:42:04 PM

Well said Dave. The #1 most important thing in any contractor-client relation is TRUST. 90% of my work is word-of-mouth and repeats- I stopped advertising altogether- with so many contractors out there than ever before, advertising seems like a waste of money. My clients trust my judgement and my skills in bringing their project to completion and provide down payments and final payments without question because they know should any problems arise- I will return to make it right.

More to the question: if there is a custom order involved in the project- cabinets, counter tops, windows/doors- I ask for 50% up front from NEW clients- this sets up trust right away. Any project over $5000. I'll ask for a third- again it's a trust thing but also covers a lot of my up front costs, the balance is paid on completion. I don't ask for deposits from regular clients because I know the second I'm finished the check will be waiting.

Search the TrustedPros directory and discover the best contractors in your area.

Find your home service pro
Great renovations start with a great contractor.

Since 2004, TrustedPros has been helping homeowners find the right contractor for their home improvements and repairs.

Post Your Project

Within hours you'll be comparing offers from top-rated professionals. It's free to post and you're under no obligation to hire.

Trustedpros Inc. does not warrant the accuracy, completeness, safety, legality or usefulness of any Content, or Whether Content is Current and up-to-date, and TrustedPros Inc. Shall have no liability whatsoever with respect to your use or reliance upon any content or for content being removed or otherwise ceasing to be available. Please refer to the terms and conditions of use of this websites for more details.

Get Free Estimates

Post your project and compare offers from top-rated pros.