How to prevent renovation nightmares: 9 key details to look out for in a renovation contract

Renovations can be one of the most stressful parts of home ownership.

No doubt you’ve heard many horror stories over the years: Home buyers blindsided by unexpected costs, terrible workmanship and delays, and – in worst-case scenarios – the contractor ghosting them and vanishing with the money.

Picking the right ID/contractor is a tough job in itself but besides the usual tips on how to choose, once you’ve decided on one – getting the contract right is another way to help ease further complications down the road.

Here are some points in your renovation contract that you absolutely should take note of:

1. Minimise upfront payments, and pay based on measurable milestones

It goes without saying: If you pay upfront, you face the risk of unethical contractors/designers running off with your money. You’ll also have a tougher time trying to get the money back, if the work ends up being sub-par. 

This is one of the most common issues when you hear of renovation horror stories. The homeowner has already paid a big chunk to start renovation works, and is now held ransom because of that.

Which is why you should always try to minimise your payment upfront, and have a good payment structure that helps to facilitate a win-win working relationship.

One example of this would be payment in tranches, such as 10 per cent once the flooring is done, 40 per cent once the kitchen is done, etc. In essence, you should only be paying for the work as it’s finished. 

Typically, you should only be paying not more than 20 per cent to start works, any larger than that and you’d really need to question your ID/contractor as to why the need for such a big commitment to start.

You can include a timetable along with these milestones, so the contractor has to meet both the timeline and the necessary standards. Speaking of timelines…

2. Set realistic dates for completion

“As fast as possible” is not always the best idea. Bear in mind that, the shorter the time frame, the more rushed the work will be – and too much haste can result in shoddy workmanship, or lower grade materials (if the first choice of materials takes too long to ship over). 

After all, you are going to be living in the home for the next couple of years. And as tempting as it is to be able to move in quickly, it’s better to have a well-constructed home from the beginning, than to deal with renovation issues down the road.

Do get the start and end date from the contractor in writing; but try to work with them rather than just dictate impossible dates. Find out how much time they need to do the work well. 

Be wary of companies who promise the shortest possible time frame: they might be companies who do rush jobs (to squeeze in as many clients as possible), or it may just be a sales pitch to get the job (resulting in many unexpected delays later). 

On your end, make provisions for your renovation to take one month longer than expected. 

3. Check that your contractor or interior designer is properly insured

Home content insurance rarely covers damage caused by renovations. Rather, damages are supposed to claim from your contractor’s insurance. 

You can ask for a copy of their insurance, as this usually shows how much they are insured for and the damages amount that they can claim for.

For established companies, being properly insured is almost a given – but beware of working with “unofficial” contractors who supposedly have better rates. If they end up damaging your property (or worse, the neighbour’s property), you could end up paying way more than you expect. 

4. Don’t assume defects will be resolved before the handover

It would make sense that all defects are addressed before handover; but some contracts are vague about this.

Some contracts may specify a certain amount of time for defect rectification (e.g., up to 30 days after completion), whilst other contracts may not even bring up the issue. In particular, note that some contracts push the responsibility entirely onto a subcontractor.

If there’s a problem with the electrical works, for example, the contract might require you to take it up with the electrician by yourself. 

Always ensure the issue of defects is fully addressed, and spelled out to your satisfaction in the contract. Remember, the final payment should only be due after all the defects are rectified.

5. Check out clauses for variation

Variation refers to changes to the initial plan.

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For example, deciding to add or remove a partition, or change the design of a feature wall.

It’s quite likely that, over the course of renovations, you will decide to make at least some changes to the plan – so the contract should spell out the costs involved. 

The key issue to look for is forfeiture fees.

These are fees your contractor is not obliged to refund, because they may have already ordered the materials or done the work (e.g., if you change the flooring materials after the tiles have been bought, your contractor still needs to pay for the previous batch). 

The forfeiture fees can be higher than you expect; and this should have a bearing on your decision to vary design plans. As such, make sure the amounts are spelled out in the contract. 

6. Ensure there’s written proof of everything

Never rely on verbal promises or confirmation; these can’t be proven later. Whatever agreement or change your contractor makes absolutely should be in writing. This can include email exchanges, text messages, or actual written documents. 

There’s an added advantage to this: when things are spelled out in writing, miscommunications are less likely. You’re better able to catch errors in the list of materials, prices, design, etc. as compared to just listening to someone say it. 

Also, remember that sometimes your project manager can just quit halfway due to a variety of unforeseen reasons. If you’ve relied up to that point on future works that have been promised over calls, you will face an uphill battle trying to prove that these were communicated. Get everything in writing.

7. Look for detail in the scope of works

Especially for first-time homeowners who have less knowledge of what usually is included in the scope of work, you’d want this to be as detailed as possible. Never mind if it takes longer to do up, as a vague scope of work is usually what causes friction during the renovation as it will always result in an “oh I thought this was part of it” type of argument.

This can go down into detail such as the dimensions of carpentry, the brands of laminates, choice of materials, and even the type of paint.

As an example of this, Acrylonitrile Butadiene Styrene (ABS) trimming may not be part of the scope, when using laminates (this is the sealant used on some wood surfaces, such as cabinetry). You’ll usually want this for cabinets that see heavy use, so make sure this is specified in the contract. 

Likewise, you might want to go into detail on the brand of paint used – Nippon Odourless EasyWash is more expensive than Nippon Vinilex 5000, for instance; but both are interior wall paints. These paints may have different qualities, and use different sealers (e.g., oil-based versus water-based).

These are details you should go into with your contractor, and ensure they’re all down in writing. 

8. Ask about the various warranties

What happens if your cabinetry starts to warp after just a year? Or if the tiles used are already starting to fade? Some materials may come with warranties that last a lifetime; others may have no warranty at all. On top of that, you need to know who to contact regarding these warranties, and how. 

These are all issues your contractors should walk you through; and they should inform you of the risks, if you choose products with no warranty. 

Note that lack of warranty can sometimes be the reason behind unusually cheap materials or products; this can make the ultimate cost quite high, if you need to replace them after short periods. 

9. Accompany your contractor to the tiling supplier

Aim to pay the tiling company directly, rather than pay your contractor. This is because some renovation companies will ask for a higher “wastage”. 

The wastage refers to extra tiles, on top of the required amount (sometimes the contractor needs more than expected, and it would be time-consuming to make a new order). While the usual wastage is 10 per cent, a contractor may ask for 15 to 20 per cent more than necessary as wastage. 

This is because unused tiles can be returned back to the tiling supplier, and the contractor will get a credit note; they can use this to offset the cost of future tile purchases for other projects. However, this comes at an unfair cost to you. 

So when you see charges for tiling materials from the contractor, request that they take them out. Ask them to charge you only for labour; you can pay the supplier yourself, when they accompany you to the shop.

So instead of:

“Provide supply and labor for tiling works to floor”

It should be:

“Provide only labour for tiling works to floor. Supply to be provided by Client”

That said, do take note that this will also mean that you will have to take on the responsibility for the coordination with the supplier. If it’s poorly managed and affects the project’s timeline, that will be on you and not the contractor.

We can’t stress this enough, but getting a detailed contract done right can save you a lot of headaches later on

Due to inexperience, many first-time homeowners tend to gloss over contract details, in their hurry to get the renovation started to move in.

One final tip is to think about a liquidated damages clause in your contract.

This can state the amount of damages that a party which has breached the contract will have to pay the other party.

So if your contractor has breached the contract, you may be able to claim the amount of damages stated in this clause, rather than having to prove and quantify the exact amount of losses first.

ALSO READ: How to choose an interior designer

This article was first published in Stackedhomes.