How to negotiate the payment terms of your home renovation project?
In order to limit the risk of litigation or disagreement, it is strongly advised to always sign a contract with your general contractor indicating the nature of the work, the details of the quote, and the payment terms. We advise you to structure the payment terms as follows:
Deposit before starting the renovations
A deposit of 10% to 15% of the home renovation project cost when you sign a quote (for more details see the guide on deposits). Negotiate a deposit as small as possible but enough for the general contractor to purchase the materials needed to start your home renovation project.
Payment during the renovations
You can ask to stagger several payments during the duration of the renovations representing 70% of the cost of the home renovation project. You can ask to divide these payments in 3 more or less equal parts (e.g. 25% - 25% - 20%).
Retainer at the end of the renovations
We advise you to hold a retainer of 15% to 20% that will be only payable when the entire home renovation project is fully completed and inspected. This is your last lever to ensure a good finalization of your home renovation project.
- It is important to always ask for an invoice for each payment made to your general contractor in order to avoid any problem in the event of disputes.
- Once the milestones with the payment terms of your home renovation project have been agreed upon with your general contractor, it is strongly advised against paying more than the work actually completed at each stage of the home renovation project: this avoids any situation where the general contractor has received more money than the work done because he / she will have less incentive to complete the work on time and with the desired quality.
- We also advise you to negotiate a clause if necessary where the work would be extended over X number of weeks as originally planned: eg if you have agreed that the work will last 3 weeks, if the work lasts more than 7 weeks you are inclined to receive a discount of X%.