Renovating Your Home

by Del Elgersma

This article deals with legal issues that arise when doing a home renovation, and is based on a presentation given by Mr. Elgersma at the Canadian Home Builders Association (Victoria) Renovation Seminar.

Renovation Contracts

There are several types of renovation contracts. They include fixed price contracts (a.k.a. stipulated price or lump sum contracts), cost-plus contracts and construction management contracts.

  • The stipulated price contract provides that the contractor will perform the renovations for a fixed price.
  • Cost-plus contracts require you to pay the contractor a percentage of the building costs.
  • Construction Management Contracts are contracts with a construction manager. The construction manager provides management and consulting services to you but is not the contractor. Instead, you contract directly with the various trades, such as the framer, electrician, plumber, drywaller and painter. The construction manager arranges the contracts but is not necessarily liable if there are problems with them. These types of contracts may be riskier for you because there is not one person that is ultimately responsible to you.

Many homeowners don’t have a contract with a general contractor, but “contract their own home”. That means that they act as the general contractor, contracting directly with the various trades, and without even a construction manager. If you are familiar with the Builders Lien Act and with construction generally, this is fine. However, there are some practical reasons for having a contractor. One is that the best trades work for contractors because contractors will hire them again. But you won’t, so you are considered a “one-off”, and so you will probably receive a trade’s lowest priority. Also, you may not get the discounts on work and materials that are available to a contractor or construction manager, and the work may not be covered by a warranty.

I will now review the most common terms of a fixed price contract:

  • First of all, a detailed description of the renovations to be done by the contractor. This is usually done by referring to certain plans and specifications that are attached to the contract as a schedule.
  • Next, the contract will state when work is to start, and by what date it is to be finished. If the work is not completed by the date promised in the contract, your remedies against the contractor depend on the wording of the contract. If the contract says nothing, the builder will normally be responsible for any damages suffered by you as a result of the contractor’s delay. This may include the cost of your accommodation during the period of delay. Some contracts set out a specific penalty for each day the work remains unfinished after the date promised. However, most contracts will excuse the contractor for delays beyond the contractor’s control.
  • The contract then sets out the price and how it is payable. Often a deposit of some kind is payable to the contractor, with the balance payable in draws upon the completion of various stages of the work.

At the completion of these stages, you are required to pay to the builder a pre-determined amount as specified in the contract. However, you hold back 10% of each draw as a builders lien holdback.

Other provisions of the contract are also important.

  • The contract should also give you the right to cancel the contract if the builder goes bankrupt. You would then hire another builder to finish the job.
  • The contract should specify that the builder is responsible for clearing off any builders liens that are registered against the property by any of the trades or suppliers.
  • The contract should include a warranty for the work done, so that the contractor is required to fix any deficiencies that show up.
  • The contract should also set out the procedures for dealing with additions to the work, which are called extras. Of the disputes that arise between owners and contractors, a large portion of them seem to be about extras. The contractor may claim that certain work was extra and on top of the contract price, while the owner may claim that the work is not extra but is included in the original scope of work, or was not authorized. To minimize the chance of this type of dispute arising, the contract should clearly set out the scope of the work through the plans and specifications. The contract should state that no additional work will be done unless you and the contractor agree in writing, including agreement on the price.

New Home Warranty Issues

If your renovation is to repair a leaky building envelope, your contractor may need to prove that it is licensed with BC’s Homeowner Protection Office and that the repair will be covered by a warranty issued by an insurance company.

These requirements do not apply if:

  • the building has less than 3 units
  • the building is a rental building
  • the building is covered by a new construction warranty
  • repair costs are less than $10,000 or $2,000 per unit in the building

So these requirements will not apply to single-family homes.

If your home is covered by a new home warranty, check the warranty to ensure that the proposed renovation will not affect the coverage under the warranty.

Builders Liens

B.C. has had builders lien legislation in various forms since 1879. B.C.’s latest Builders Lien Act came into force in 1998. The objectives of the legislation are to ensure that construction funds are used for their intended purpose, and to protect those who add value to a building under construction.

To fulfill its objectives, the Act uses two strategies.

  • First, it provides a form of security to builders, subcontractors, workers and suppliers who work on a building that is under construction – this is the builders lien.
  • Second, it requires you as an owner to hold back from the contractor 10% of each payment payable to the contractor. This is called the builders lien holdback.

Builders Liens

A lien is a charge on property for the payment of a debt. A builders lien is a claim by a person who has supplied work or material to a building under construction. A builders lien may be claimed by a contractor, subcontractor or worker. These are all defined terms under the Act and may also include architects, engineers and suppliers of materials.

Under the new Act, the deadline for filing builders liens is 45 days from the date of substantial completion of the work. The lien is registered against the property for the amount of money owed to the claimant for the work or material he or she has supplied. If you have an experienced contractor there will most likely not be any builders liens, but if any of the trades are nervous about being paid, they will file a lien.

Builders Lien Holback

The builders lien holdback provides 2 functions.

  • First, it ensures that there is a pool of money out of which builders lien claims can be paid.
  • Second, it limits your liability for lien claims. If you comply with the holdback provisions of the Act, your maximum liability for lien claims will be limited to the amount of the 10% holdback or the unpaid balance of the price, whichever is greater, EVEN IF the total amount of all builders liens exceeds that amount.

Although lien claimants may have a valid claim against the person who hired them for the full amount owing, the lien claimants can only claim against you as the homeowner for the amount of the builders lien holdback or the unpaid portion of the purchase price. If you pay the holdback into court, the liens can be cleared from title and it is then up to the contractor and the trades to sort it out. It is no longer your problem.

You may have to pay the holdback into a special bank account. The Builders Lien Act requires that the owner and the contractor administer the account jointly, so any withdrawals will require the signature of both you and your builder.

There are 2 exceptions to the requirement to set up a bank account for the builders lien holdback. The first is where the total value of work and materials is less than $100,000. So most renovations will not require this special bank account. The second is where you have a construction mortgage and you authorize the lender (and the lender agrees) to disburse your mortgage money. In that case the lender must hold back 10% of the mortgage money from each mortgage draw.

If no liens have been filed within 55 days of the date of substantial completion, the holdback is released to the contractor. It cannot be released before that time. If liens have been filed within that period, the holdback must be used to satisfy the lien claims. If a settlement is not possible, the holdback can be paid into court and the court will then order that the liens be discharged from your title.

For more information about builders liens, click here.


If you have a mortgage, it will say that you are not allowed to renovate without the bank’s consent.
For example, in the prescribed standard mortgage terms, the borrower/property owner promises:

  • not to tear down any building or part of a building which forms part of the land,
  • not to make any alteration or improvement to any building which forms part of the land without the written consent of the lender

All mortgages have similar terms, so ensure that you have obtained your bank’s consent before you get started.

Strata lots

In addition, if you are renovating a townhouse or duplex, the Strata Property Act provides that:

  • you can’t alter common property or limited common property without written consent of strata council
  • you can’t alter certain parts of strata lot without written consent of strata council. This includes:
    • renovations that affect the structure or exterior of a building;
    • chimneys, stairs, balconies attached to the exterior of a building;
    • doors, windows or skylights;
    • fences or railings that enclose a patio, balcony or yard;
    • floor and wall coverings and electrical and plumbing fixtures, if part of the original construction of the building.

There are many important issues to be aware of. A good contract and some knowledge of the Builders Lien Act is essential.


I just wanted to extend my thanks for your absolutely first class service. When we were purchasing our home, as you know, we had many obstacles to overcome and actually thought in the last two days that our deal might not go through. It was a very stressful time in our lives and I want you to know that we’ll always appreciate your calm, caring, professional manner and how you made us feel at ease and that it would all work out because we had you representing us.

You and the rest of your team are awesome, and this is why I will continue to refer you to anyone I know who needs legal representation. As a realtor being able to refer my clients to someone who I know without a doubt will provide them with the best legal advice and service adds to my confidence in terms of the overall service I am providing.

You have, in essence become a key element of my business team and I look forward to building on what is already a successful business relationship.”


Over the past year Lianne Macdonald has provided excellent legal advice to my real estate clients. I am always impressed with the quality of her services, as well as the care shown by Lianne and her staff. Lianne is always available if I have any questions or concerns. Her sound advice and legal counsel has greatly helped me in difficult and unusual situations. Lianne Macdonald is a proactive lawyer, an honest and caring person and a trusted friend. Without hesitation, I would recommend Lianne’s services to others, and will continue to use her service where they pertain.


Lianne, thank you so much for your excellent work on our conveyance. Your extra work helped save us thousands of dollars.

Dear Mr. Elgersma, I want to thank you and your team for all your help during my recent sale in Victoria. My lawyer here in Ontario was very impressed by your fee and said it was a very good deal in his experience. Thank you very much.


I recently had the experience of selling my condo. As I am not in the habit of frequently buying and selling my home I find the whole process a bit unnerving. To add to my unfamiliarity with home transactions, I was due to be out of the country on the completion date of my sale. Needless to say this was somewhat worrisome to me.

I hired Del to handle the legal transaction of my sale. What a great decision this turned out to be. Del and I got together a week prior to my trip and completed the necessary paperwork. There are a lot of papers to sign when selling a home and Del took the time to explain each document to me and answered all the questions I had. He then assured me that he had everything he needed in order to handle the transaction in my absence.

Del had explained everything so clearly to me and made me feel so at ease about the process that I felt completely comfortable leaving my legal interests in his hands while I was off vacationing. This made quite an impression on me as I have never felt comfortable leaving my fate in the hands of others, especially the likes of lawyers!

Previously I would have worried about everything going smoothly on the actual day of my home sale but to my delight and surprise on the completion date of this sale I laid in my hammock and drank champagne in the sunshine celebrating with complete confidence that the transaction would be handled just fine. I returned home only to have my suspicions confirmed . . .yes, in my absence, money had been quietly deposited to my account!

Thank you Del for allowing me to let go of the stress and worry around this large, important and infrequent type of event in my life.