Contractor Scams in Ontario: 18 Red Flags Before You Sign, 5 After Work Starts, and the Laws That Protect You

Before you sign: the 18 red flags

1. No office, no address, no local supplier who will vouch for them. A truck and a cell phone is not a business.
2. Shabby tools, broken equipment, a vehicle held together with tape. People who do not look after their own things do not look after yours.
3. A secret low price “just for you” that you must not mention. Either they do not intend to finish or they cannot price; both end the same way.
4. Cash only, or a big discount for cash. No receipts, no HST, no insurance, no recourse.
5. Leftover materials from another job at a discount. Nothing falls off a truck; someone else paid for it, or it is below grade.
6. “I was in the neighbourhood.” Nobody good has a gap in the schedule they fill by knocking on doors.
7. The driveway paving crew that just did your neighbour’s. Usually a different crew shadowing the good one.
8. A large deposit up front. Reasonable is 10 to 15 percent, or the cost of materials ordered for you; construction contract deposits explains what is normal.
9. A “demonstration” discount if you let them use your house as a model or refer customers. An established contractor has enough finished work.
10. No written contract, or one that is a single page with a price on it. What a good contract includes is the list.
11. They want you to pull the building permit. On a contractor-built job the permit holder is responsible for the inspections; a contractor who will not pull it is often unlicensed or uninsured.
12. A low bid with materials “extra”. The number you were given is not the number.
13. A quote with no measurements, no notes and no calculations behind it; “we did one just like this” is not an estimate.
14. Pressure: sign today, price good until Friday, the crew is free Monday.
15. No HCRA licence for a new home, no WSIB clearance, no liability certificate. Verifying a contractor before signing tells you how to check all three in ten minutes.
16. References they cannot produce, or that are all from the last six months.
17. A business name that changed last year. Look it up; failed builders reappear under new names.
18. A price far below the others. Why construction costs what it costs explains what the missing money was supposed to pay for.

After work starts: 5 more

1. Price hikes because “materials went up”. On a fixed-price contract the contractor carries that risk; the price changes only with a change order you signed. When the builder wants more money is the playbook.
2. A request to move a progress payment earlier. They are using your money to pay for the last job. Pay to the schedule.
3. Materials that do not match the contract: thinner plywood, less gravel, a different window. Check the spec against what arrives; once is a mistake, twice is a pattern. The substitution clause is where this is supposed to be governed.
4. Subcontractors or suppliers calling you about unpaid bills. That is a lien coming. Construction liens for homeowners explains what to do that week.
5. Pressure for the final payment before the deficiency list is done. The last cheque is the only leverage you have left; final payment and deficiencies says how to hold it properly.

The laws on your side

• Consumer Protection Act: a written contract is required for home renovation work over $50, you get a 10-day cooling-off period on a contract signed at your home, the final price cannot exceed the estimate by more than 10 percent without your agreement, and you can cancel within a year if the contractor did not meet the disclosure rules. Cancelling a renovation contract covers how.
• HCRA: anyone building a new home for sale or under contract must be licensed; the directory shows discipline and conditions, and the regulator takes complaints.
• Tarion: new homes built under contract are enrolled and warranted; a contractor who says you do not need it on a new house is wrong or unlicensed.
• Construction Act: the 10 percent holdback on every payment is required, not optional, and it is what protects you from your contractor’s unpaid subs. The holdback explains it.
• Small claims court to $35,000 for the rest, and a construction lawyer above that. When to hire a construction lawyer is the honest answer about when it is worth it.

What good looks like

An address, a licence, a certificate of insurance and a WSIB clearance before you ask. A written quote with measurements and a specification. A contract you understand with a payment schedule tied to stages, a 10 percent holdback, and change orders in writing. A deposit you could afford to lose and would not have to. References you called. Finding a reputable builder and how to find the best builder are the positive version of this page.

Related guides on this site

Sources and further reading

• Consumer Protection Act (home renovation rights)
• Your rights when signing or cancelling a contract
• HCRA Ontario Builder Directory

Questions people ask