How You Pay Determines Your Leverage
The payment schedule is one of the most important negotiating points in any renovation contract. Structure it right and you have protection throughout the project. Structure it wrong and you lose leverage the moment things go sideways.
A Good Payment Schedule Structure
| Milestone | Payment % |
|---|---|
| Contract signing | 10% |
| Demo and rough-in complete | 25% |
| Inspections passed, drywall complete | 25% |
| Cabinetry, flooring, tile complete | 25% |
| Substantial completion + walkthrough | 10% |
| Deficiency correction / final 30-day hold | 5% |
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⚠ Estimate Disclaimer: These are only ROUGH estimates that can vary wildly. Do not take these numbers as gospel. Having a defined scope of work and exact selections will give you clarity.
The Holdback: Your Last Line of Defence
Alberta’s Builders’ Lien Act entitles you to hold back 10% of the contract value for 45 days after substantial completion. This protects you from liens filed by unpaid subcontractors or suppliers. If a lien is filed and you’ve already paid in full, you’re exposed. Keep the holdback until the lien period clears.
What NOT to Agree To
- Paying more than 10-15% upfront (25%+ is a red flag)
- Making final payment before your punch list is complete
- Paying based on calendar dates instead of milestones
- Any arrangement that leaves you with no leverage at the end
Large Deposits: When They Make Sense
For long-lead custom items (custom cabinets, stone, appliances), contractors legitimately need a larger upfront payment to order materials. This is normal. The key: the deposit should be tied to a specific material order, not just handed over as general working capital.
Methods of Payment
- Certified cheque or bank draft: Clean paper trail
- E-transfer: Acceptable for smaller amounts, keep records
- Credit card: Some contractors accept for deposits — gives you chargeback protection
- Cash: No paper trail. Avoid for any significant amount.
Keeping Records
- Save every invoice and receipt
- Note the date and what was completed at each payment milestone
- Take photos throughout (time-stamped)
- Keep all correspondence in writing (email, text) — not just phone calls
When a Contractor Requests More Money Mid-Project
Legitimate change orders happen. The red flag is when extra charges appear for things that were clearly in the original scope. Before paying anything extra, get it in writing: what changed, why it changed, and what it costs. Verbal agreements for extras are unenforceable.
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