What Should a Renovation Contract Include Before You Sign?
A renovation contract can be perfectly legal and still be a bad construction agreement. It can be signed, dated and enforceable, and still leave out the things that decide whether your job runs smoothly or turns into an argument about money halfway through.
I’ve spent 30+ years in construction, 25 of them running my own contracting company. Most of the renovation disputes I’ve seen didn’t start with bad workmanship. They started with a contract that was vague about what was included, how extras get priced, or when the money is due.
This is what I look for, as a builder, before a homeowner signs. It isn’t legal advice. Near the end I’ll point out which parts belong with a lawyer.
1. A scope of work you could hand to another contractor
The scope is the most important part of the contract. If it’s vague, everything else is built on sand.
A good scope says what’s being done, room by room or area by area, and it refers to the drawings, specs or finish selections by name and date. A weak scope says things like “renovate main bathroom” or “supply and install kitchen as discussed.”
Look for three things:
- What’s included. Demolition, disposal, framing, plumbing, electrical, drywall, paint, trim, finishing. If a trade isn’t mentioned, don’t assume it’s in.
- What’s excluded. A good contract lists exclusions plainly. “Electrical by owner” or “painting not included” is fine as long as you know it before you sign.
- What’s “by owner.” If you’re supplying fixtures, tile or appliances, the contract should say when they need to be on site and who’s responsible if they arrive damaged or late.
A simple test: could you hand the scope to a different contractor and have them price the same job? If not, it’s not specific enough.
2. How the price actually works
There are three common ways a renovation gets priced, and a lot of contracts mix them.
Fixed price. One number for the defined scope. Clean, as long as the scope is clear. If the scope is vague, a fixed price just moves the argument to the change orders.
Allowances. A set amount for something you haven’t chosen yet, like tile, fixtures or cabinets. This is where a lot of budgets go wrong. Every allowance should say:
- the dollar amount
- whether it’s supply only, or supply and install
- what happens if you go over or under
A $2,500 tile allowance that only covers the tile, and not the waterproofing, setting materials and labour, isn’t a real number. Ask whether each allowance is realistic for what you actually want, not what the cheapest option would cost.
Cost-plus. You pay actual costs plus a markup or fee. It can be fair, especially on older homes where nobody knows what’s behind the walls. But the contract should state the markup or fee, how costs are documented (receipts, invoices, timesheets), and ideally give you an estimate or a cap so you can see where it’s heading.
3. A payment schedule that follows the work
The payment schedule should track progress on site, not the calendar. You want each payment tied to something you can see: rough-in done, drywall up, cabinets installed.
Watch for:
- A large deposit. Sometimes a bigger deposit is reasonable, for example when custom windows or cabinets have to be ordered up front. Ask what it covers. Some provinces and states limit deposits on home renovation work, so check yours.
- Payments that run ahead of the job. If you’ve paid 80% and the job is 50% done, you’ve lost most of your leverage.
- The final payment. It should be due after the job is complete and the deficiencies are fixed, not when the contractor says they’re done.
- Holdbacks. Many provinces and states have lien or holdback rules that affect how and when you pay. Those rules vary a lot, and this is one of the places a lawyer or your local authority is the right source.
4. Start date, timeline and what happens with delays
You won’t get a guaranteed finish date on most renovations, and I’d be wary of anyone who promises one without conditions. But the contract should give you a start date, an expected duration, and what counts as a reasonable delay.
It should also say who orders long-lead items like windows, cabinets and custom doors, and when. Late orders are one of the most common reasons a job stalls with the walls open.
5. How change orders work
Almost every renovation has changes. Some you ask for, some come from what’s found behind the walls. The contract should spell out how they’re handled:
- every change is in writing before the work is done
- the price is agreed before the work is done, not added to the invoice later
- any effect on the schedule is stated
- how extras are priced, including the markup
“We’ll sort out the extras at the end” is how a $50,000 job becomes a $68,000 job with no paperwork to show why. I’ve written more about this in what to check before approving a change order.
6. Permits and inspections
The contract should say who applies for permits, who pays for them, and who books the inspections. On most jobs that should be the contractor.
Pay attention to inspections before things get covered up. Once insulation and drywall go in, nobody can see the framing, plumbing or wiring anymore. If a required inspection gets missed, fixing it later means opening walls, and someone has to pay for that.
7. Materials and substitutions
If a product matters to you, the contract should name it: brand, model, colour, grade. “Standard” or “builder grade” means whatever the contractor wants it to mean.
It should also say the contractor needs your approval before substituting anything. Substitutions happen for good reasons, like supply problems, but you should be the one who decides.
8. Site protection, cleanup and living in the house
This part gets skipped because it isn’t about the finished product. It matters a lot if you’re living there during the work.
- How floors, finishes and the rest of the house will be protected
- Dust control
- Daily cleanup and final cleanup
- Where waste goes and who pays for disposal
- Working hours, and access to water, power and a washroom
9. Insurance, licensing and warranty
Ask for proof of liability insurance, and proof of workers’ compensation coverage where your province or state requires it. If someone gets hurt on your property, you want to know it’s covered.
Licensing rules for renovation contractors vary widely between provinces and states. Some require a licence for general renovation work, some don’t, and some only license specific trades. Check what applies where you live.
The contract should also say what the warranty covers, how long it lasts, and how you make a claim. “Workmanship guaranteed” on its own doesn’t tell you much.
10. Deficiencies and the final walkthrough
Every job has a deficiency list at the end. That’s normal. What matters is how it’s handled.
The contract should include a final walkthrough with you, a written deficiency list (in the US, usually called a punch list), and a timeline to fix it. The final payment should be tied to that list being done. Once you’ve paid in full, getting someone back for the last few items gets a lot harder.
I’ve covered this in more detail, including BC’s holdback rules, in final payment on a BC renovation.
11. Cancellation and disputes
The contract should say what happens if either side needs to end it, and how disagreements get handled. You should know what you’d owe if you had to stop the job partway.
This is where construction advice ends and legal advice starts.
What should go to a lawyer, not a builder
A builder can tell you whether a contract makes sense on site: whether the scope is complete, the allowances are realistic, the payments follow the work and the change process is clear. A lawyer is the right person for:
- whether a clause is enforceable
- lien and holdback rights
- cancellation rights and consumer protection rules where you live
- liability, indemnity and dispute resolution clauses
- anything you’re being asked to waive
The best protection is usually both: someone who knows construction to make sure the agreement works on site, and a lawyer if there’s anything legal you’re unsure about.
A quick check before you sign
- Could another contractor price this scope from the contract alone?
- Is every allowance a realistic number, and do you know what it covers?
- Does each payment line up with work you can see?
- Is the final payment tied to a finished deficiency list?
- Do changes need a written, priced sign-off before the work is done?
- Are permits, inspections and insurance covered?
- Are the products you care about named?
If you can’t answer yes to most of these, ask the contractor to clarify in writing before you sign. A good contractor won’t mind. Clear contracts protect them too.
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General construction guidance from 30+ years of experience, not legal, engineering or home-inspection advice. For legal questions about your contract, talk to a lawyer.
