How should I structure payments to my contractor during a renovation?

In Ottawa, you should never pay more than 10% upfront to a contractor, and structure payments tied to completed work milestones - this protects you under Ontario's Construction Lien Act.

The safest payment structure for Ottawa homeowners follows these guidelines:

Initial Payment (Maximum 10%)
Start with no more than 10% down payment or $1,000, whichever is less. Legitimate contractors in Ottawa have established credit lines with suppliers and don't need large upfront payments. If a contractor demands 25-50% upfront, that's a major red flag - walk away.

Progress Payments Tied to Milestones
Structure payments around completed work phases, not calendar dates. For a typical Ottawa bathroom renovation, this might look like:

• 10% to start


• 25% when demolition and rough-in work is complete and inspected


• 25% when drywall, tiling, and fixtures are installed


• 25% when final finishes are complete


• 15% final payment after final walkthrough and any deficiencies corrected

Ontario's 10% Holdback Rule
Under Ontario's Construction Lien Act, you're required to hold back 10% of each progress payment for 60 days after substantial completion. This protects you if subcontractors or suppliers aren't paid and file liens against your property. Many Ottawa homeowners don't know about this legal requirement, but it's crucial protection.

Payment Method Protection
Always pay by cheque or bank transfer - never cash. Write cheques to the business name exactly as it appears on their WSIB clearance certificate and business license. For larger renovations over $50,000, consider having your lawyer hold funds in trust and release payments as work is completed.

Red Flags to Avoid
Be extremely wary of contractors who want large upfront payments, especially those going door-to-door in Ottawa neighborhoods like Kanata, Orleans, or Barrhaven claiming they have "leftover materials." Legitimate contractors don't need you to finance their business operations.

Documentation Requirements
Each payment should be documented with an invoice showing exactly what work was completed. Take photos before making payments. Your contract should clearly outline the payment schedule tied to specific deliverables, not just dates.

WSIB and Insurance Verification
Before any payments, verify the contractor has valid WSIB clearance (wsib.ca/clearances) and liability insurance. This protects you from being liable for workplace injuries on your property.

Final Payment Protection
Hold the final 15-20% until you've had time to test all systems, check for deficiencies, and ensure all permits have received final inspection approval from the City of Ottawa Building Code Services (613-580-2424).

For major renovations requiring building permits through ottawa.ca/building, coordinate payments with inspection schedules. Don't make progress payments until required inspections pass - this ensures work meets Ontario Building Code standards before you pay for it.

Remember: a contractor who pressures you about payment timing or amounts is showing you exactly how they'll handle problems during your project. Take your time and protect your investment.