How do I negotiate a payment schedule with my contractor?

In Ottawa, you should never pay more than 10% down to start a project, and structure payments tied to completed milestones - this protects you under Ontario's Construction Act and gives you leverage if issues arise.

Ontario's Legal Framework

Under Ontario's Construction Act, you're required to hold back 10% of each payment until 60 days after substantial completion. This isn't negotiable - it's the law. This holdback protects you from liens and ensures the contractor completes all work properly. Many Ottawa homeowners don't realize this is mandatory, but it's your legal right and obligation.

Recommended Payment Structure for Ottawa Projects

Start negotiations with this framework: 10% to begin work, then payments tied to specific completed milestones. For a typical Ottawa renovation, this might look like: 10% to start, 20% when demolition is complete and permits are approved, 25% at rough-in stage (plumbing, electrical, HVAC), 25% when drywall and flooring are complete, 10% at final completion, and your final 10% holdback released 60 days later.

Never agree to large upfront payments or payment schedules based on time rather than work completed. If a contractor asks for 50% down or wants weekly payments regardless of progress, that's a red flag. Legitimate Ottawa contractors understand the holdback requirements and won't pressure you for unusual payment terms.

What to Include in Your Payment Agreement

Your contract should specify exactly what work must be completed before each payment is due. Include inspection periods - you get 48-72 hours to review completed work before payment is due. If you're in Kanata, Orleans, or anywhere in Ottawa requiring permits, tie a payment to permit approval from the City of Ottawa Building Code Services (613-580-2424).

Make sure your contractor provides lien waivers with each payment. This document confirms subcontractors and suppliers have been paid and won't place liens on your property. In Ontario, unpaid subcontractors can lien your home even if you've paid the general contractor.

Protecting Yourself During Negotiations

Verify your contractor's WSIB clearance certificate before signing any payment schedule. Check wsib.ca/clearances to ensure they're covered. An uninsured contractor who gets hurt on your property becomes your financial responsibility. Also confirm their insurance is current - ask to see the certificate.

For electrical work, ensure your contractor has a valid ESA license (check licensing.esasafe.com). For gas work, verify TSSA certification at tssa.org. Don't make payments for work that isn't properly licensed - you'll face issues getting permits and inspections from the City of Ottawa.

Red Flags in Payment Negotiations

Be wary of contractors who won't discuss the 10% holdback, demand large upfront payments, or refuse to tie payments to completed work. If they claim they need money for materials, offer to pay suppliers directly rather than giving cash upfront. Legitimate Ottawa contractors have credit with suppliers and don't need your money to buy materials.

Official Resources

Review Ontario's Construction Act requirements at ontario.ca, and contact the City of Ottawa Building Code Services at 613-580-2424 if your project requires permits. For consumer protection advice, check ontario.ca/consumer. Remember, a good contractor will welcome a fair payment schedule - it shows you're serious and protects both parties.