Renovation payment schedule: what a fair one looks like in Ontario

The fastest way to lose money on a renovation is to pay ahead of the work. If you have handed over half the project before a single material is ordered, you have lost your leverage, and a contractor who runs into trouble is now using your money to fix their own cash flow.

A good payment schedule is fair to both sides. The contractor needs enough cash flow to buy materials and pay crews, and you need to know that what you have paid for is actually on site, installed and inspected.

How does Jopie structure payments?

Our schedule is simple and it is written into every contract:

Payment	When	What it covers
30%	Before we start	Locks your start date, trade scheduling, permits and engineering, and the first materials
40%	At the midpoint of the job	Work is visibly half done: demolition and rough-ins complete, with the bulk of the labour and materials already on site
30%	When the work is complete	Final walkthrough done and the job finished to the contract

We want to be upfront about why. For years we financed projects ourselves and took payment after the work was finished. It is a friendly way to work, and plenty of good clients honoured it. But when a job is done and the final invoice arrives, some clients change their mind about what was agreed, and we have had to chase payment through legal action, which costs money and time on both sides. Nobody benefits from that. A staged schedule means no one is exposed for very long: you only ever owe for work that is already in your home, and we are not carrying the whole cost of your renovation on our own account.

A 30 percent opening payment is higher than the 10 to 15 percent you will sometimes see quoted, so it is fair to ask what it pays for. Ours goes to what happens before the first wall is opened: scheduling the trades, permits and engineering, and ordering materials with long lead times. Whatever number a contractor asks for, it should be written down along with the reason.

What is milestone billing?

Instead of paying by calendar date, you pay when a stage is done and you can see it. Our midpoint payment works this way: it falls due when the job really is about halfway, not when a date arrives. Other contractors split the work into more instalments, for example after demolition, after rough-ins and after drywall. The principle is the same: you see the milestone with your own eyes before you pay for it.

What is the 10 percent holdback in Ontario?

Ontario's Construction Act (formerly the Construction Lien Act) requires the owner to retain 10 percent of the price of the work as a holdback. This protects the people who supplied labour and materials, and it protects you from liens if a subcontractor is not paid. The holdback is released after the lien period has run, which generally depends on the work being certified or declared complete and the prescribed number of days passing. The details can be technical, so confirm how it applies to your project with your lawyer or the Ministry of the Attorney General's guidance. In practice this means the final payment on a job and the statutory holdback need to be handled together, so ask your contractor to show in the contract how the two fit. A contractor who understands the Act will explain it before you ask.

Red flags

• A demand for 50 percent or more before any materials are ordered.
• Cash-only discounts that mean no invoice, no record and no recourse.
• Pressure to pay a milestone before the work is finished.
• No written payment schedule, or a schedule that is only calendar dates.
• A contractor who cannot show insurance or WSIB, see what licensed, bonded and insured really means.

Payment, contract type and changes all fit together. Read this alongside fixed-price vs cost-plus and change orders.

Why we ask for 30 percent up front: a lesson we paid for

This schedule did not come from a textbook. It came from a hard job. We quoted a full-home renovation at four months: demolition of the kitchen, bathroom floors and some walls, then the rebuild, tile, paint and finishing. Our team is efficient and we finished in three. We expected the client to be pleased. Instead they treated the shorter timeline as a reason not to honour what we had agreed, as if we were being paid for time we had not used.

That is a misunderstanding we now address up front. The price pays for the scope, the planning and the result, not for the number of days on site. Finishing early takes meticulous scheduling with trades, suppliers and inspectors, and that skill comes from running many jobs. The dispute cost us money, time and a good deal of emotional energy, and it is why we moved from financing jobs ourselves to staged payments.

We are not saying every client behaves this way. Most do not. But a clear schedule protects honest clients too, because everyone knows what is owed and when.

Keep reading

• Fixed-price vs cost-plus: which contract protects your renovation budget?
• Expecting the unexpected: how professional builders handle change orders
• Licensed, bonded and insured: what it really means for your renovation

Sources

• Ontario: Construction Act

This guide is general information from a contractor, not legal advice. Rules, prices and ranges change, so confirm current details before you sign a contract.