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PART 7 of How to Avoid a Renovation Disaster:

“The contractor’s financial stability won’t affect my renovation”

By John Liptak, CEO & President, OakWood
This 8-part blog series reveals how customers make assumptions that lead to six big (and often costly) mistakes. Each blog shares “must ask” questions you can ask to avoid being taken advantage of by a dishonest or unqualified renovator.

This assumption that a contractor’s financial stability won’t affect your renovation can cost you thousands of extra dollars and enormous emotional grief through absolutely no fault of your own.

Here’s how this industry works.

You pay the renovator. The renovator pays the Suppliers and Trades working on your project. None of that should be a problem. Except, many contractors are in very poor financial shape.

Some are near bankruptcy.

A high debt-to-asset renovation company puts you at great risk.

If the renovator runs into cash flow problems and doesn’t pay their Suppliers and Trades those disgruntled workers can slap a lien on your home. Here’s a real example of how this can happen.

The project was for a full blown addition that included a foundation.

The homeowner paid over $25,000 to start the work.

The contractor tore down the back wall and window for the existing dining room and digging began. Then all work abruptly stopped.

The homeowner was shocked to learn that a lien had been placed on their home! It turned out the contractor was not paying his trades professionals who filed a lien against the home in an effort to get paid.

The homeowner fired the contractor, lost the deposit and had to settle the lien before we could resume the project and get it done right.

Basically, in a situation like this, your home becomes collateral and you are at risk of not having your project completed.

A lien has to be paid out to the Suppliers and Trades in order for construction to resume and your bank to release mortgage funds – even if you have already paid the renovator!

You would be surprised how often this happens. The reason is this; most renovators are using the cash from their current project – which could be your renovation – to pay the bills from a previous job.

What can you do to protect yourself?

The simple step you can take to avoid financial and potential insolvency problems like this is to do a check with the Better Business Bureau (BBB) and for a modest fee, a PPSA check (

What does a BBB and PSA check reveal?

A BBB check tells you if there are any complaints or warranty issues. Look for an A+ rating from the BBB.

A PPSA check tells you if a renovator owes any money or if there are any liens registered against the company.

If a renovator doesn’t get a clean bill of health on both, walk away…fast! You don’t want to get stung with a potentially expensive lien.

Must ask questions:

1. Is the renovator a member of the Ottawa Better Business Bureau with an A+ rating and zero complaints?

2. Does the renovator have any company debts that could place your project at risk (i.e. what does a search reveal)?

3. Does the renovator maintain the $5 Million of Liability, Commercial Auto and Workers Compensation Insurance and will their insurance agent send you their certificate directly?

4. Does the renovator have a letter of good standing from their business bank – and can you call them if necessary?

5. Does the renovator provide a statutory declaration of protection – the most important protection for homeowners?

6. Does the renovator maintain business accounts with local suppliers and are they in good standing?

Taking the time to ask these six simple questions will help you weed out potential renovators or contractors whose financial stability maybe in question. More important, asking these questions will reduce or eliminate your exposure to unnecessary risk and heartache.

John Liptak is CEO and President of OakWood, an Ottawa-based renovation company. Established in 1956, OakWood is a fourth generation family run business. Under John’s leadership, OakWood has grown to become Ottawa’s largest and most established full service renovation business and Ottawa’s first and only Mike Holme’s approved renovation partner. A winner of numerous awards, OakWood has been voted Ottawa’s Best Home Designer and Renovation company every year since the Consumer Choice awards were introduced in 2007.