Protect Yourself from Home Renovation Scams

Commercial Real Estate Agent with RE/MAX West Realty Inc., Brokerage (Toronto)

contractor bad

Home Renovation Scams                          

Ontario Real Estate Source                          

By Brian Madigan LL.B.

You should be aware that there are many companies in the home renovation business which are really nothing more than “scam artists”.

They take deposits for work, in fact, often large deposits, but they really never show up to do the work, or perhaps they will start, ask for a greater deposit and then leave.

There’s always some excuse as to why they can’t just come and finish the job.

Why do they exist?

Well, it seems that most people don’t really follow up with references. They may ask, they may get a list, but they never, ever, ever phone anybody.

Besides, that group, most homeowners do not ask for references in the first place.

Don’t pay a deposit. What’s the point to that? Is your money to fund your deal. They say they have to buy some materials. Well, let them buy the materials. That will show that they have some money in the game, and they need to get paid. This means that they have to do the work. That’s the first step.

But, with the true scam artists, they are just looking for more deposits, from more people, for more projects, that will never get done.

So, how do you protect yourself:

·        Research the company

·        Ask for references

·        Call the references

·        See the work they have done in the past

·        Attend a job site, where they are working now

·        Get a proper estimate

·        Get the contract in writing

·        Don’t fall for the old “cash” and no tax routine

·        Get a signed contract

·        Pay your small deposit by cheque

·        Get other estimates from other contractors

·        Get at least 4 more, that means 5 in total

·        Pick the best one

·        Know that if the job doesn’t get done, you will have to go with one of the others to complete the job

·        The second contractor will charge a premium to finish the work

·        Make sure your unpaid contract amount will at all times leave you with enough money to finish the job

·        Pay a very, very small front-end good faith deposit

·        Remember to use the holdback provisions under the Construction Lien Act

·        Retain 10% from every payment

·        Pay out the accumulated 10% 45 days after completion

·        Get warranties from the manufacturer from any particular items or equipment that may be installed

·        Offer a good recommendation for the contractor, if they did a good job

If anything goes wrong then you will have to contact your lawyer, or a solicitor practising in the field and if you have to go to court, you will need a barrister or litigation lawyer.

Be careful and good luck!

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through RE/MAX West Realty Inc., Brokerage 416-745-2300.


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Bud & Beth McKinney
Cary/Raleigh/Apex NC - The Team That Cares, RE/MAX United

Wow, great advice, most of it I hadn't heard of before.

Feb 28, 2013 04:34 AM #1
Malcolm Johnston
Century 21 Lanthorn Real Estate LTD., Trenton, Ontario - Trenton, ON
Trenton Real Estate

Very good advice Brian. It's quite often seniors that get burned by these unscrupulous operators who prey on people's good nature. They are a black mark on the industry.

Mar 01, 2013 11:40 AM #2
Marcia Hawken
Naples Luxury Specialist


In Naples we have so many snowbirds from Ontario who buy a place, pay good money to a contractor and go north for the summer, expecting with good reason, that the work will be done. They come back to lots of excuses and work not finished.  MY experience is to have a date that the work is be completed and penalize for the delay.  All too common these days and getting worse. 

Mar 04, 2013 08:35 AM #3
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