ARTICLES & INTEREST
How much deposit should you pay for your renovation?
September 09, 2018
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Whether you’re remodelling your entire kitchen or adding in a new deck for summer, you want to ensure your project is done well and by the appropriate professional. Some contractors will charge an advance payment or deposit for their work, but how much is reasonable?
For small projects that will be completed quickly, professional contractors may not require a deposit or pre-payment at all. Their contract or work order may simply specify payment in full on completion of the work. If they do ask for a deposit, it should not exceed 10 to 15 percent of the estimated total cost of the job.
For larger projects and those where the work will take place over weeks or months rather than days, a similar 10 or 15 percent deposit is normal. For these projects, the contract will likely lay out a payment schedule that links installments with specific construction milestones. For example, if an addition is being built, a progress payment might be linked to a successful completion of the structural inspection. It’s important that payments correspond with work milestones so you know you are paying for work that has been completed.
Exceptions to the Rule
There are exceptions to the 10 to 15 percent deposit rule. If your project requires custom materials or products — items the contractor cannot return if you change your mind — it is reasonable for them to ask that you pay for these things when they are ordered. This could involve custom countertops or replacement windows that are not stock sizes but would be custom-made for your home. These special order items and the payments required should be identified as such in your contract.
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