How to Avoid a Home Reno Nightmare

Planning

If you were making a list of the top five riskiest financial ventures open to private people, major home renovations would be right up there. The potential for a train wreck is high unless you make absolutely sure it doesn’t happen. Let me show you what I mean by inviting you into a real-world renovation nightmare that’s unfolding right now.

Back in early September, I got a desperate email from a Toronto homeowner that I’ll call Peter (not his real name). He’d hired a contractor to complete a backyard addition and to add a second story to his house. On September 5, Peter settled on a deal and gave Mr. Contractor a $30,800 deposit. Twelve weeks later, the two men can’t agree on anything, not even what actually happened and what was said.

“I came home to find one of Mr. Contractor’s men sleeping in my basement, and another guy drinking beer from my fridge,” explains Peter. But for his part, Mr. Contractor says these claims are all lies (even though he wasn’t on the site). His workers aren’t allowed to drink on the job. And “there’s nothing wrong with a guy closing his eyes for a few minutes on his break, is there?”

“When I became concerned about the quality of work happening on my home,” explained Peter, “I fired Mr. Contractor and asked for my money back. At first he offered to give me all but $8,000 to cover his costs. We agreed. Later he changed that to a $16,000 hold back. Two weeks later, Mr. Contractor said he would be keeping $25,000. Now he says he’ll be refunding nothing.”

On his side, Mr. Contractor explains that “Peter never told me about an underground river running beneath his house. He wasn’t honest with me and he never did terminate the contract. Peter got a new builder that offered a cheaper price. That’s why he fired me.”

But Peter says he repeatedly warned Mr. Contractor of the high water table in the area and says his new price for the project is 30% more money, not lower.

“We eventually ended up agreeing on a refund of $20,800,” maintains Peter. Mr. Contractor agreed to come to my house at 10 am on Oct. 24 and give me a certified cheque, then I’d give him back the tools I’d been holding as leverage. He never showed up, claiming to be detained, but sent his guy to get the tools at 10:30 am. After I refused to hand over the gear, Mr. Contractor called me back, furious, claiming that ‘we had a deal’.”

Whatever that deal was, no one agrees. Mr. Contractor says that no refund agreement was ever finalized. “Peter is blackmailing me”, explains Mr. Contractor. “He’s holding tools and preventing one of my men from earning a living for his family. I won’t deliver any kind of a refund until Peter returns those tools.” A few days later, the police knocked on Peter’s door at 10:30 pm.

The police, polite as they were, weren’t concerned about the thirty-grand in dispute. Peter had to either hand over the tools or step into the squad car and go to jail. He returned the tools.

As it stands now, Peter hasn’t received any kind of refund, despite the fact that only $5,000 to $6,000 of excavation work was done on his site. City investigators refused to comment on their ongoing investigation of Mr. Contractor and the two companies he operates, though they did make a suggestion to me. A freedom of information request made with the City of Toronto Corporate Access and Privacy Unit might reveal some ‘interesting’ results from previous investigations. Too bad Peter hadn’t done this first.

Are You Planning a Renovation?

Please be very careful. There are three things you should glean from the expensive, true-life disaster that’s unfolding right now:

“Talk” to Previous Clients

First, you really do need to be your own watchdog before any building work begins. This means actually “talking” to previous clients of any contractor that you’re considering.

Although Peter did visit previous jobs completed by Mr. Contractor, he “never actually saw or talked to any homeowners. Now that I think of it, I don’t even know for sure if he built those projects.” That was Peter’s big mistake right there. You need to exercise as much care hiring a contractor as you do choosing someone to marry. The stakes are huge.

It’s easy to ring up $100,000+ costs on even modest renovations, and that should be a sober warning for any homeowner, especially when you realize that the contracting business is governed by surprisingly little real-world regulation.

• Talk to at least three previous clients from each contractor on your list.
• Don’t take short cuts and don’t let you’re enthusiasm for a project cause you to move ahead without this essential research.
• Better to have an old, small house and money in the bank than a big expensive hole in the ground and sleepless nights.

Include Refund & Payment Details in Contract

Found a contractor with a proven track record? You still need to include the following in a written contract before any work begins:

• refund agreements
• payment schedules

Formal Search

If you live in Toronto, it’s also a good idea to do a formal search on any investigations that may have been conducted on the company.

• The search costs $5
• Learn more at Corporate Access and Privacy Unit  or 416-392-9684.

Once you’ve made sure that honesty, goodwill and professionalism are present on both sides of your renovation project, then chances are excellent that your job will succeed. Just don’t expect it to happen automatically.

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