Paying for the Work

If a deposit is required it should be a nominal amount representing “good faith”. However, when special appliances, materials or custom cabinet work must be ordered, you may be required to provide a larger deposit. (It may be advisable to make your cheque payable jointly to the contractor and the supplier.)

Avoid “progression” clauses that require payment at specific times, regardless of the amount of work that has been done.

Advances will usually be done by progress advances. When funds are required an inspector will be sent to the site to complete a report. Once the advance is calculated, the cheque will be forwarded to the lawyer’s office for disbursement. At this point the 10% lien holdback will be deducted – this will occur with each advance.

10% Lien Holdback:

This is to protect yourself against liens that can be placed on your property by suppliers or workers who were not paid by the contractor. All provinces except Quebec have lien laws that limit your liability to a certain percentage of the contract price. The percentage for Nova Scotia is 10%. The proper procedure is to withhold this amount from all advances for the time allowed so creditors, if necessary, can register a lien on your property. This is known as a mechanic”s lien. The time allowed for Nova Scotia is 45 days after the contract work is completed.

Note: If the mortgage applicants are building through a contractor and the mortgage is considered high ratio requiring CMHC input, the contractor must be registered under the New Home Warranty Program. At the time of mortgage application, we will require their builder number.