Guide to Creating a Strong Contract for Residential Construction

Posted on February 15, 2024

Guide to Creating a Strong Contract for Residential Construction

Residential construction and renovation projects are one of the most common agreements made regularly in the Greater Toronto Area in Toronto. When beginning work on your home with a contractor, whether it's a reputable company or a freelance contractor, a strategic contract is essential. It can be incredibly beneficial for all parties involved. A residential contract for construction is a foundational document that governs the relationship between homeowners and contractors during a construction project. It is especially valuable when managing conflicts and disagreements or ensuring a smooth workflow. If residential construction does not go to plan, you can work with a reputable contract lawyer to understand your individual obligations and rights. Robert Karrass, a reputable civil lawyer in Toronto and Ontario, and the Karrass Law team can help you know how to manage residential construction and contract disputes to minimize your loss. 

The best first step is creating a solid contract. Here are some tips.

What to Include in Residential Construction Contracts

In Ontario, the law mandates that any home renovation or repair contract worth more than $50 must be in writing. Before diving into the specifics, it's essential to understand the basic requirements of a contract. It should clearly outline the scope of work, payment terms, timelines, and the responsibilities of all parties involved. Clarity and specificity are vital to ensuring everyone has the exact expectations from the project. By including defined expectations, you will know precisely how and when to respond in the case of a breach of contract. 

  • Scope of Work: The scope of work details the project's plans, specifications, and other documents describing the work to be done. To avoid future disputes, be as detailed as possible, including materials to be used, colours, models, and brands. A contract lawyer can help ensure this section is comprehensive, leaving no room for misinterpretation.
  • Payment Terms: Clearly defined payment terms help maintain financial transparency and trust between the homeowner and contractor. This includes the total project cost, payment schedule, and conditions for any project scope changes.
  • Timeline and Deadlines: Construction projects are notorious for delays, but a contract can help manage expectations by specifying a start date, major milestones, and a completion date. Include provisions for extensions and how delays will be communicated and addressed. Consulting with a civil lawyer in Toronto can help you understand how to incorporate flexibility without sacrificing accountability.
  • Dispute Resolution: Despite best efforts, disputes may occur. A good contract will include a dispute resolution clause outlining the steps to be taken if a disagreement arises. This may involve mediation, arbitration, or civil litigation. A civil lawyer reviewing this section ensures that the dispute resolution process is fair and enforceable.
  • Termination Clause: A termination clause outlines the circumstances under which either party can terminate the contract, such as failure to make payment or comply with the contract terms. It should also specify any notice requirements and financial obligations upon ending the contract.

Homeowners Rights in Ontario for Residential Contracts

The Ontario government has certain regulations in place, like the Consumer Protection Act, to protect homeowners in the province from fraud and extortion. For example, contractors cannot charge residential property owners more than 10% of their original quote once the work is completed. This means it's vital that homeowners retain their original quote in case civil litigation is required. 

After signing a contract in the home, the Ontario government also specifies that there is a 10-day cooling off period, during which the contract can be cancelled even if work has already begun. However, the homeowner is responsible for reasonable compensation if work has started during this time frame. 

Importance of a Good Contract for Construction

With the increase of freelance construction contractors and the prevalence of construction-related fraud, homeowners need to stay vigilant and protect themselves. A contract is a vital step in contractor-customer relationships, as it can protect both parties from common scams that frequent the residential construction industry. If you've fallen victim to a construction-related scam or your contract is being broken by your contractors, contact Karrass Law for legal advice. With many years of experience working on fraud cases and contract breaches, our civil lawyers in Toronto will help you pursue meaningful legal action. Get started with legal advice for Robert Karrass. 


Please, enter a valid value

Call Us (416) 477-6022