My Builder Wants More Money: Extras, Escalation and When to Say No

Pile one: things that are fairly extra

A builder is entitled to more money for work that was not in the contract. That covers changes you asked for, and conditions nobody could reasonably have known: rock, a high water table, a buried oil tank, a Code interpretation the building department sprang on both of you. The test is simple: was it in the drawings and the scope, and could a competent builder have seen it coming?

The process matters as much as the reason. A legitimate extra arrives as a change order, with a description, a price and a schedule effect, signed by you before the work is done. If the first you hear of it is an invoice, you are entitled to ask why. Verbal change orders are where a lot of these arguments start. The unknown site conditions clause says who carries the risk of what is in the ground.

Pile two: price increases

On a fixed-price contract, the price is the price. Lumber went up, the window supplier raised its rates, the plumber quit: that is the builder’s risk, and it is why fixed-price contracts carry a margin. The exception is an escalation clause, which some builders added after 2021. If you signed one, read it: most allow increases only for specific materials, only above a threshold, and only with proof of the supplier’s price change. The escalation clause guide explains what a fair one looks like.

On a cost-plus contract there is no fixed price, so a higher cost is just a higher cost, and the question is whether the costs are real and the fee is being calculated correctly. You are entitled to the invoices. Cost-plus invoices and records sets out what to ask for.

Pile three: money ahead of the schedule

The dangerous request is the one that comes with a story: a supplier needs a deposit, the crew needs to be paid Friday, a draw is late and could you just advance the next stage. Sometimes the story is true. It is still a no, because a builder who needs your next draw to fund your current stage is a builder whose cash flow is a problem you are about to inherit. Pay for completed stages, on the schedule, with the holdback held. If the builder cannot operate on that, the problem is bigger than this week’s cheque, and what if the builder goes out of business is the page to read next.

How to answer, in writing

For each request, one of three replies:

• Legitimate change: “Please send a change order with the price and any schedule effect; I will sign before the work proceeds.”
• Price increase on a fixed-price contract: “The contract is fixed price with no escalation clause, so I am not able to accept an increase. If you believe a clause applies, please point me to it.”
• Money ahead of schedule: “I will pay each draw on completion of the stage as the contract sets out. I am not able to advance funds.”

No anger, no speeches. The builder who is being reasonable will understand; the builder who is not will reveal it.

What you can and cannot refuse

You can refuse to pay for work you did not authorize, prices that are not in the contract, and advances. You cannot refuse to pay for completed, authorized work because you are annoyed, and you cannot keep the holdback beyond its term without a lien claim to justify it. The 10 percent holdback under the Construction Act is released after the lien period following substantial performance; it is not leverage for a finishing dispute. The holdback guide covers the timing.

If the requests keep coming and the answers keep not making sense, the pattern itself is the information. Problems with your builder, start here lays out the escalation path, and Ontario’s consumer protection rules for home renovations and repairs set out rights that apply to contracts with homeowners.

Related guides on this site

Sources and further reading

• Construction Act, R.S.O. 1990
• Consumer Protection Act (home renovation rights)
• HCRA Ontario Builder Directory

Questions people ask