Contractor Payments and Change Orders
A good payment plan links money to clearly described work and keeps both homeowner and contractor informed. Changes should be documented before extra costs accumulate.
1. Agree on a written payment schedule
Payments may be tied to measurable milestones, deliveries or progress, depending on the project. Confirm what each payment covers, whether tax is included, and how completed work will be verified. Avoid paying for large amounts of unperformed work without understanding the risk.
2. Know the difference between deposits, progress payments and holdbacks
| Term | Meaning |
|---|---|
| Deposit | Money paid before work starts, often for scheduling or materials; terms should be written. |
| Progress payment | Payment for an agreed stage or measured progress. |
| Holdback | An amount that may be required by applicable construction-lien legislation; rules vary and require project-specific advice. |
| Final payment | Payment after agreed completion conditions, deficiencies and required documentation are addressed, subject to contract and law. |
Ontario's Construction Act (opens in a new tab) includes statutory holdback rules in applicable situations. Do not assume a simple universal percentage or release date applies to every homeowner project; seek legal advice if uncertain. Other provinces and territories have their own lien and holdback rules (Quebec, for example, uses a different system), so check the rules where your property is located.
3. Require written change orders
A change order should identify the original scope, proposed change, reason, added or credited cost, tax, schedule effect and signatures or documented approval. Ask for pricing before changed work begins whenever safe and practical. Urgent work to protect the property may require prompt action and immediate documentation.
4. Keep a simple project ledger
- Original contract amount and date.
- Approved change orders, positive or negative.
- Invoices, payment dates and receipts.
- Work completed, outstanding deficiencies and inspections.
- Updated forecast final cost and remaining budget.
5. Handle disagreements early
Document the issue with dated photos and the relevant contract clause, ask for a written explanation, and avoid informal scope changes. For significant disputes or lien concerns, obtain appropriate legal guidance promptly because deadlines can apply.
Frequently asked questions
Should I pay the entire price upfront?
Full advance payment increases homeowner risk. Discuss reasonable deposits and progress payments suited to the work and applicable law.
Can a contractor charge for hidden damage?
Possibly, depending on the contract and circumstances. Ask for evidence, a written scope and approval process before additional work.
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Educational disclaimer: Information is general and may not reflect current rules in your location. Confirm permits, licensing, contracts and safety requirements with relevant authorities and qualified professionals.