What payment methods are safest for paying contractors?

Never pay the full amount upfront to contractors in Ottawa - this is the biggest red flag for scams and puts your project at serious risk.

The safest payment approach follows Ontario's Construction Lien Act requirements and protects you from contractor fraud, which unfortunately targets Ottawa homeowners regularly.

Safest Payment Methods in Ottawa

Credit cards are your best protection for deposits and initial payments. Credit card companies offer chargeback protection if contractors disappear or don't perform work. Many legitimate Ottawa contractors accept credit cards, especially for deposits up to $5,000.

Bank drafts or certified cheques work well for progress payments once work is visibly completed. These provide a paper trail while ensuring funds are available.

Electronic transfers through your bank are acceptable for established, licensed contractors, but avoid e-transfer for large amounts with contractors you haven't thoroughly vetted.

Cash payments should be avoided entirely - no paper trail and no protection if issues arise.

Ontario's Legal Payment Structure

Ontario's Construction Lien Act requires a 10% holdback on all payments until 60 days after substantial completion. This means if your project costs $20,000, you hold back $2,000 until two months after completion to protect against liens from unpaid subcontractors or suppliers.

A typical safe payment schedule for Ottawa projects:

• 10% deposit maximum (never more, regardless of project size)


• Progress payments tied to completed milestones (30% when materials delivered, 30% at halfway point, 30% at substantial completion)


• Final 10% holdback released 60 days after completion

Red Flags to Avoid in Ottawa

Be extremely wary of contractors who demand:

• Large upfront payments (over 10%)


• Cash-only payments


• Payment before permits are secured


• Full payment "to secure materials"


• Payment via cryptocurrency or gift cards

Legitimate Ottawa contractors understand Ontario's payment laws and won't pressure you for unusual payment terms.

Verification Before Any Payment

Before paying anything, verify through:

• WSIB clearance certificate (wsib.ca/clearances)


• ESA licensing for electrical work (esasafe.com/contractor-locator)


• TSSA certification for gas/HVAC work (tssa.org)


• City of Ottawa business license if required for your area

Documentation Requirements

Always get written contracts specifying payment terms, and ensure all payments include:

• Detailed receipts with HST numbers


• Clear description of work completed


• Lien waiver forms for progress payments over $1,000

For major renovations in Ottawa, consider having your lawyer review payment terms, especially for projects over $50,000. The upfront cost of legal review often prevents much larger losses from contractor issues.

Remember: Legitimate contractors in Ottawa have established payment processes that protect both parties. If a contractor pressures you for unusual payment terms, that's your signal to find someone else.