Is your Contractor Licensed ?
We all know someone who has hired the “fly-by-nighter”—the contractor who takes a deposit and flees into the abyss, or starts a job, and leaves a homeowner with demo’d walls, exposed electrical, and no toilet (the WORST). Unfortunately, it happens in all types of home improvement work, from a simple new-window installation to full renovation. Everyone has heard the horror stories, or experienced them firsthand. It’s common knowledge that these types of contractors exist.
However, not many people know,
In Alberta, it is illegal for any contractor to take an up-front deposit without being a licensed contractor.
How do you know if a contractor is legit? Too legit to quit? There are steps you can take to protect yourself before you instill full trust in a contractor you just met.
Gleaning portfolios and before-and-after pictures is a good start when researching a potential renovation contractor, as is reading over testimonials and following up with references. However, another aspect of research that is frequently overlooked can bring greater reassurance before you commit any time or hard-earned cash.
Alberta has strict rules for prepaid contractors who take money before the work is completed and solicit work outside a regular place of business.
Service Alberta uses the terms “surety bond”, “security,” “letter of credit,” and “cash or term deposit” to describe the money they withhold from a contractor in the event a consumer suffers financial loss due to negligence of a prepaid contracting business.
Under the Fair Trading Act, the Government of Alberta protects consumer interests through licensing of prepaid contractor businesses. Without getting too technical, to receive a Prepaid Contracting Business License, contractors require a surety bond (or Cash Security Agreement) and a Service Alberta-approved contract that outlines the goods and services provided by the contractor, itemized price list of services, Buyer’s Right to Cancel, start and completion dates and location of project, among other things.
Penalties for violating the Prepaid Contracting Business Licensing Regulation or the Fair Trading Act can include fines up to $300,000 or three times the amount the offender obtained as a result of the offence, and/or prison terms for serious or repeat offences.
That’s some serious stuff. Service Alberta’s “undercover” work has exposed contractors working without a licence in the past. In 2013, for example after the flooding in Southern Alberta, Service Alberta used “bait houses” to catch and expose unlicensed contractors. They also engage in Consumer Programs and public presentations to educate contractors and consumers on the rules, and will be visiting Fort McMurray soon.
In the case of the contract, look for:
-Scope of work: outlines what you are buying and types of materials that will be used in your renovation.
-Pay schedule: outlines when monies are due and how payment is taken. We want to make sure you’re not going to be surprised when an invoice arrives, and want to make sure you know what you are paying for.
-Drawings: a visual of the floor plan and renovation or home-improvement changes. Drawings should always be done professionally, by an architect, engineer, or interior designer. Sorry folks, no napkin sketches here!
-Estimate: includes a complete description of the work that will be done and type of materials that will be used. Never sign a contract that lacks details. If a contractor tells you your renovation is going to cost $80,000.00, you should have a detailed estimate of where that money is going, what finishes are being selected, etc.
Diamond Contracting and Revolving Rooms like to include our own list of miscellaneous waivers in our contract, including asking your permission to use the email you provide us for communication purposes, and permission to share progress and completion photos on our websites.
We also present waivers that protect us and our clients from any unforeseen liabilities on the work site, just in case Jack the Cat makes a clean escape out the front door, or rogue neighbourhood children show up and need babysitting while we are working on site.
Our Prepaid Contractor Business Licenses are renewed every two years, and during the renewal, we are responsible for providing an updated copy of our contract. Service Alberta then approves our contract, and we are granted the Prepaid Contractor Business License. We are sometimes asked to change the terms of our contracts by clients, but, in fact, we are not permitted to do so without it being approved by Service Alberta.
During the licensing process, Service Alberta does background checks on its applicants looking for criminal records, complaints, and bankruptcies, and helping to protect consumers.
We believe being licensed and surety bonded is necessary to protect clients, but it also works to maintain high standards, a strong work ethic and integrity in our industry. It is essential consumers have a way of checking out who is working for them before they invest their money and hand over the keys to their greatest investments.
What are some ways to find out if a contractor is licensed?
1. Go to the Service Alberta website to look up the name of the company and contractor you are looking to hire.
2. Contact the Service Alberta Contact Centre at 1-877-427-4088 for confirmation of whether a contractor’s license is up-to-date.
Other ways to tell if your contractor is legit?
Better Business Bureau (BBB) and Canadian Home Builders Association (CHBA) memberships are a good indication that your contractor considers outward, public accountability an important part of their business and profession. So, don’t be afraid to dive in and do your research! Start off a project on the right foot: find out as much as you can about the contractor you plan to work with!