Canmore-based lawyer, Austin Ward sat down with Anthony Burden to discuss how homeowners can protect themselves when building a home or undertaking renovations to their existing home.
What is the most common area where you see homeowners end up in disputes with their contractors?
When the homeowner signs a contract without reading it, or without fully understanding it. Or just as bad, where there’s no written contract at all. It’s common to sign a contract and then put it on the shelf and think that everything will go smoothly. Sometimes that’s the case. But if problems arise, it’s usually at that point the homeowner realizes they’ve agreed to pay for certain items outside their control or have assumed risks outside of their control. Courts generally hold parties to their written agreements, regardless of whether they read the agreement before signing.
So, do you advise getting a lawyer involved to review every contract?
I’d say it’s based on the homeowner’s level of understanding and comfort level in reviewing contracts. But from experience, the legal fees to draft or review a contract are a fraction of the legal fees for a protracted dispute. Sometimes a contract isn’t open for negotiation – it’s a case of “take it or leave it.” But engaging a lawyer to explain the potential risks and pitfalls will almost always be a wise investment so the homeowner has more knowledge about their rights and obligations.
What is the most common misconception you hear from your clients?
Homeowners often think that as their project is relatively small, they are not required to holdback funds. The Alberta Prompt Payment and Construction Lien Act applies to all residential construction in the province, whether new builds or renovations. This is the case for a $20 million custom home or a $2,000 kitchen renovation. A homeowner’s obligation is to retain (or holdback) 10% of the value of work performed. Practically, this is rarely done on small-scale construction or renovations. But the potential risk is that if the contractor fails to pay a subtrade or employee, and that entity registers a lien against the home, the homeowner can end up paying twice for a portion of the work.
Any other general advice on how a homeowner can protect themselves?
Do your due diligence on your contractor. Ask for references of past projects and speak to those owners. Often if you have a negative experience, you’re not the first person. Ask if they will be using subcontractors, and if they are, do your due diligence on those subcontractors too. Lastly, be reasonable. A lot of disputes become disputes because parties aren’t willing to compromise. Labour shortage and supply chain issues are unfortunately part of construction. Homeowners that work collaboratively with their contractors tend to have more cost and schedule certainty than those who take an adversarial approach.
