How do I negotiate a payment schedule with my contractor?

In Ottawa, the safest payment schedule follows Ontario's Construction Lien Act requirements: never pay more than 90% until the job is complete, and hold back 10% for 60 days after completion to protect against liens.

Standard Payment Schedule Structure

A fair payment schedule typically breaks down like this: 10-15% deposit to secure materials and start date, then progress payments tied to completed milestones rather than time periods. For example, on a $30,000 bathroom renovation, you might pay $3,000 upfront, $8,000 when demolition and rough-in are complete, $10,000 when tile and fixtures are installed, $6,000 when finishing work is done, and hold the final $3,000 (10%) for 60 days after completion.

What Ottawa Homeowners Should Negotiate

Start by asking contractors to explain their payment schedule and reasoning. Legitimate Ottawa contractors understand lien law requirements and won't pressure you for large upfront payments. Push back if they want more than 15% down or demand payment before work milestones are met. Many homeowners don't realize they can negotiate these terms - contractors often start with their preferred schedule, but there's usually room for adjustment.

The key is tying payments to completed work you can see and verify. Instead of paying "50% halfway through," specify "50% when plumbing rough-in passes City of Ottawa inspection and tiling is 75% complete." This gives you leverage if work stalls or quality issues arise.

Red Flags in Payment Demands

Be extremely cautious of contractors demanding large upfront payments, especially 50% or more. This is the number one scam indicator in Ottawa's construction market. Similarly, avoid contractors who want full payment upfront for materials - legitimate contractors have supplier accounts and credit lines. If they claim they need cash for materials, they likely have credit problems or aren't established businesses.

Also watch for contractors who resist the 10% holdback or don't understand lien law requirements. Any licensed contractor working in Ontario should know these rules inside and out.

Protecting Yourself During Negotiations

Always get the payment schedule in writing as part of your contract, including specific milestones that trigger each payment. Include language about what happens if work is delayed or doesn't meet standards. For larger projects over $50,000, consider having payments tied to City of Ottawa inspection approvals where applicable.

If a contractor balks at reasonable payment terms or pressures you to pay faster, that's a serious red flag. Good contractors want you to feel secure and understand that proper payment schedules protect both parties.

Ontario Legal Requirements

Remember that under Ontario's Construction Lien Act, any subcontractor or supplier who isn't paid can place a lien on your property, even if you paid the general contractor. The 10% holdback for 60 days protects you from these potential liens. This isn't just good practice - it's legally required on projects over $30,000.

For disputes about payment schedules or contractor demands, contact Ontario's consumer protection office at ontario.ca/consumer or call 1-800-889-9768 for guidance on your rights.