When and how should I pay my contractor?
- coraliefortin076
- Jun 12
- 6 min read
Embarking on a construction or renovation project is an exciting adventure, but it also comes with its share of complexities. Whether you want to build your dream home, transform your cottage into a four-season residence, or add a garage to your property, financial planning is an essential pillar of your success.
One of the most sensitive—yet often overlooked—aspects concerns paying the contractor. When should you pay them? How much should you pay as a down payment? How can you ensure that payments reflect the progress of the work?
At Plan Maison Québec, we specialize in designing residential construction plans in Quebec and support our clients every step of the way, from planning to construction. The goal of this article is to provide you with clear, comprehensive, and practical information on the payment terms to agree on with your contractor.
Poor payment management: a risk to avoid
Too often, well-intentioned homeowners fall into the trap of poorly structured payments. Whether it's by making too large a down payment, paying in advance without a guarantee, or accepting unclear deadlines, the consequences can be costly.
Unfinished work, chronic delays, uncorrected defects, or even site abandonment: all of these can result from clumsy payment management.
Plan Maison Québec always emphasizes this point to its clients: adhering to a clear and progressive payment schedule is a safety net for both the client and the contractor.
The importance of a written and detailed contract
Before even discussing payments, you must ensure you have a complete, signed, and legally binding contract. This document must be much more than a simple estimate or verbal agreement. It must precisely describe:
the work to be completed (plans, materials, finishes)
the expected deadlines and schedule
the total cost of the project
the payment terms (deposit, milestones, balance)
warranties and insurance
the responsibilities of the client and the contractor
recourse in the event of a dispute
A well-drafted contract provides you with a solid framework in the event of a dispute. At Plan Maison Québec, we always advise our clients to have the contract validated by a professional, especially for large-scale projects.
The deposit: establishing a basis of trust without overexposing yourself
The deposit is the first payment you'll make for the project. It marks a mutual commitment. For the contractor, it generally covers certain initial costs: booking the team, purchasing basic materials, and starting the project.
But be careful: too high a deposit can put you in a difficult position. Generally, 10 to 15% of the total cost is considered reasonable. This allows the contractor to operate without you taking excessive financial risk.
Some situations may justify a higher deposit, such as custom materials that must be ordered in advance. In this case, request proof of purchase or a written commitment from the contractor.
At Plan Maison Québec, we recommend never paying a deposit exceeding 20% without concrete and documented compensation. It's best to exercise caution, even if the professional seems trustworthy.
Progressive payments: pay as the work progresses
Once the deposit has been paid, the remaining payment must be structured according to the project's completion stages. This is referred to as progressive payments or "milestone payments."
Each milestone must correspond to a specific and measurable step, such as:
completion of foundation work
construction of the frame
installation of exterior cladding
installation of doors and windows
interior finishing
This isn't about paying an amount on a specific date, but rather upon the completion of verifiable work. You must be able to verify that this stage has been completed before making payment.
Plan Maison Québec also recommends including a verification mechanism in the contract. For example, an inspector could validate the completion of key stages before you pay the corresponding amount. This rigor reduces the risk of disputes and fosters a healthy collaborative environment.
The last payment: a strategic holdback
The final balance is often 10% to 15% of the total amount. This is a strategic holdback that gives you leverage to ensure the work is completed to your satisfaction.
Never pay this final payment without conducting a final inspection, ideally with the contractor at your side. Take the opportunity to make a list of items to correct, if necessary.
We also recommend waiting 30 days after the work is completed before releasing this final amount. This period allows you to confirm that all subcontractors have been paid and that no legal hypothecs are likely to be registered on your property.
At Plan Maison Québec, we often support our clients up to this stage, helping them verify that everything complies with the plans, standards, and agreements.
How to pay: preferred payment methods
Every payment must be traceable. Use official methods: bank transfer, check, credit card, according to established agreements. Avoid cash at all costs, even for small amounts.
Every payment must be accompanied by a written receipt. This should include the date, amount, nature of the work covered, and the contractor's signature.
When in doubt, some people choose to issue checks in the name of the contractor and a supplier jointly. This ensures that the funds will actually be used to pay for the necessary materials.
Legal mortgage: an often ignored risk
Did you know that a contractor who hasn't paid their subcontractors can cause you serious problems, even if you've paid them in full?
Indeed, these third parties can register a legal hypothec on your property, which could prevent you from selling or refinancing it. This situation is unfortunately common and can lead to unexpected costs and even legal action.
To protect yourself:
Request a written receipt for each major payment
Request proof that subcontractors have been paid
Keep all proof of payment
With Plan Maison Québec, you can rest assured that we only work with professionals who honor their financial commitments.
RBQ license and insurance: your preliminary checks
Before signing anything, take the time to verify that your contractor has a valid RBQ license. This license is mandatory for most construction projects and provides you with a minimum guarantee of the company's skills and solvency.
In addition, the contractor must be insured. They must provide you with proof of civil liability insurance, which covers damage that may occur to your property during the work. Finally, they must be registered with the CNESST (French Labour and Safety Board) to ensure the safety and rights of their employees.
These details should be included in the contract or provided to you in advance. Plan Maison Québec systematically verifies these points when selecting partners.
Special cases: interior renovation work or self-construction
Interior renovations, such as remodeling a kitchen, adding a floor, or insulating a basement, may seem less complex than new construction. Yet, the same principles apply.
The contract must be clear, payments must be staggered based on the work completed, and audits must be documented. Even for a modest project, poor payment can result in losses.
In self-build projects, you may also be tempted to pay subcontractors directly. In this case, you must be extra careful. Keep a written record of all agreements and ensure you report payments correctly, particularly for tax and legal reasons.
What if the construction site goes wrong?
Despite all precautions, some projects can encounter difficulties: a contractor disappears, poorly executed work, interminable delays... What can you do?
The first thing is to avoid paying what isn't due. Don't be intimidated by verbal threats or demands for payment outside of the contract. You can also send a written formal notice or initiate recourse with the RBQ or a mediator.
But the best thing to do is to avoid this type of situation. This is why Plan Maison Québec insists so much on the careful selection of your partners, clear contracts, and sound payment management.
Conclusion
Paying your contractor isn't just a transactional gesture: it's a strategic tool for securing your construction or renovation project. By establishing a clear payment schedule, requiring concrete proof at every stage, and working with licensed professionals, you'll maximize your chances of avoiding unpleasant surprises.
At Plan Maison Québec, we do much more than draw up your plans. We help you navigate every step of a well-managed project, from design to construction. Your house, cottage, or garage deserves rigorous management, and we're here to support you every step of the way.
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