Our 8th Semi-Annual 'How to Hire a Renovator' Seminar was a great success! Here are the speaker notes from the evening.

 

---

PRESENTER:
David Litwiller of Litwiller Renovations & Custom Homes

---

A couple of information web sites you might want to refer to:

www.CMHC.ca
www.servicealberta.gov.ab.ca
www.calgary.bbb.org
www.calgaryrenovations.com
www.renomark.ca

Calgary Home Builder’s Association now has over 30 Renomark Renovators. These are companies that must adhere to a powerful code of ethics and business principals.

A couple of “Did You Know?” stories:

• About 1972 I worked on this building as an apprentice carpenter constructing the foundations and concrete structure. A lot of  miles behind me since then and the roads were not all paved.
• As of January 1st this year, in Canada, 1,000 people PER DAY are turning 65.
• This spring, Canadian Home Builder’s Association Calgary Region has conducting an audit of all Renomark Renovators. This is to ensure all Renomark Renovators are currently complying with the rules and regulations for the simple Privilege of being a Renomark member including the basics such as: Current with Worker’s Compensation, City of Calgary Business License, Service Alberta license and bonding.
• Last year there was 56.7 billion dollars in renovation spending.

Where or how do you start the decision making process? This is my opinion only.

1. If you are hesitant to invest in a large budget renovation I would suggest you need to consult with a professional Realtor. Ensure you find the right realtor and even ask for references.
2. If you are reasonably confident you want to proceed, a professional renovator should be able to help establish budgets. Check references.
3. This is when your check book comes out. You need professional plans. No one can quote anything without professional plans drawn to scale and with some details on them. When hiring a technologist, check references.

This is probably no time for and old and worn out cliché’ but: You Don’t Plan to Fail, Don’t Fail to Plan.

As an independent business, why are we conducting this work shop?

When you, the consumer, read or hear of the horror stories that sometimes occur with renovations it makes it that much harder for legitimate, professional renovators to earn your confidence. I said earn, not gain your confidence. The more you understand about the processes needed, the easier your project will be.

None of us here are lawyers. All we’re trying to do is de-mystify some of the issues surrounding renovations.

How can confidence be earned when you’re not really sure of what questions you could or should ask and what answers you should expect? On our web site you’ll find a Check List of almost 70 questions that you should feel comfortable asking any renovator.

Here are a couple of easy ones to consider:

• Have They Done This Type Of Work Before?
• Do they have similar and recent projects you can look at?
• How long have you owned the business? (Story)

Never should you feel uncomfortable or invasive when asking questions of the renovator.

Try this one on for size:

• Do you have any lawsuits current or pending? If so, why?

Remember, there’s always two sides to each story and somewhere in the middle the truth can be found.

I have been finding that people are interviewing several renovators and they are then choosing the “Best Fit” for their particular project. In my opinion the relationship is very important. You don’t need to necessarily “like” the renovator but you do need to be confident in their knowledge and company ability to execute on what they’ve promised.

Speaking of promises. There’s nothing like a clearly written agreement document. It will demonstrate several issues that are very important in any business transaction where one party is offering product/service to another party. The contractor has:

• truly listened to you
• heard your concerns
• identified quality of products intended for your project
• indicated expected timelines for elements of the project

By putting all issues on paper it goes a long way to understanding each party’s responsibilities and what actual intentions are. Take the written proposal and spend some serious concentration time with it simply in order to know that the contractor’s proposal does, indeed, reflect what you are wanting done. There will always be an element of trust needed but the written word helps clarify intentions. If you are concerned about an heirloom piece of furniture and discussions were to cover it with a brand new tarp and then wrap in plastic, insist on having that in writing.

Check References

I don’t mean call a provided reference up and ask “How did they do?”

I mean ask questions:

• Was progress consistent and concentrated (no weekly gaps in activity). A day or two here and there might happen for legitimate reasons.
• Were they on budget? If not, why not? Perhaps change orders affected the budget.
• How were change orders handled?
• Why were change orders needed? Was something missed in estimating or did scope of work simply change?
• Did their own team and trade partners respect your home?
• Why did you hire them? What were your processes?
• Would you hire them again?
• May I come over and see their finished product?

When getting close to signing on the bottom line:

Who are your professional trade partners going to be?
Is the plumber “uncle Bob?” who is handy with tools or is the electrician cousin “Vinnie”? Windows, cabinets, dry wallers. Who are they? Do you hire from “Cash Corner”?

How long have you been working with your trade partners?

You, the customer, should have no problem calling some of the key trade partners and asking how they like working with the renovator. Does the renovator pay their bills in a timely fashion? You can be held liable for unpaid bills. (Later conversation)

Two years ago a couple in the Maritimes thought they were performing quality “due diligence” when they got 4 quotes for an addition. 3 quotes came in at 105 to 115,000 and one quote came in at 60,000. They went with the 60,000………….. This little project made national news but really what we all need to learn from this is pay attention to the big picture and common sense.

Last year a couple in Toronto area interviewed multiple renovators and just felt that they were too “Mom & Pop” and they wanted a larger company. They went with “Super Salesman” who claimed offices in the States and bla bla bla. It cost them over 100,000 extra to get the project back on track and even part of that was the extreme difficulty in getting a professional interested in working with them. Apparently they interviewed a couple dozen renovators. You heard me right. A couple dozen interviews.

For me, these are a couple of very important messages:

Check References and Get It In Writing !!!

Please ensure you are hiring a Company and not a “Bad/Good” Salesman…

City of Calgary - Planning and Building.

Permits and why are they needed?

You, as the homeowner, are responsible to ensure your project has the proper permits

If you enquire at the City Planning and Building department you will essentially be told you need a permit for almost anything and everything you want to do. There are exceptions for things like a simple kitchen or bathroom remove and essentially replace in the same spots. The simple esthetics like painting and flooring don’t usually need permits. However, poorly done wiring has the chance of burning your house down so you really don’t want Cousin Tom, Dick or Mary doing your electrical or a handy kinda character flooding your new kitchen with bad plumbing. I will always recommend journeyman supervision when having mechanical/electrical work done. While you’re at these seemingly minor alterations I see nothing wrong with bringing these areas up to today’s code requirements at probably little extra cost.

When developing a basement, changing window sizes, moving walls or wanting an addition you definitely need a building permit

If you don’t have a permit, will your insurance cover an accidental fire? Will they cover any kind of accident involving the neighbor’s children? If the business agreement between you and your renovator deteriorates you will probably have some very interesting explaining to do if you wind up in court.

Couple or 3 years ago an incorrectly wired kitchen pot light started a fire in Vancouver. The insurance company covered it for the current homeowner but went back two previous owners and sued the Handy Homeowner who was responsible for the problem.

Some of the permits that you’ll need to consider:

• Building Permit
• Electrical Permit
• Plumbing/gas Permit
• Fireplace Permit
• Development permit
• Deck permit under certain circumstances
• Basement development

Expect permits to take anywhere from same day and up to 12 weeks.

One of the newer rules at the City is whenever you/we move or change  a wall in your residence we must have an engineer’s instruction and approval to do so. Remember a couple of years ago there was a story about a house that collapsed due to inexperienced workers on site. Another similar story just last year.

When permits are applied for and followed as they must be, you receive the third set of eyes needed to ensure you are getting building code approved trade practices. As an example, only a certified Master Electrician can pull an electrical permit or you the homeowner can pull a homeowner’s permit. What you can not do if you pull your own electrical permit, is hire the work to be done by others.

A professional Renovator will be able to handle all permitting processes and needs as required. It is up to you, the home owner, to ensure the renovator is truly performing and instigating these proper processes.

Some questions asked at the last presentation:

Consumer Tip Sheet – Home Renovations Contractor Checklist:

• A Detailed Description of the work to be done (include blueprints if appropriate)
• A statement of the Type and Quality of Materials to be used
• A statement of any Work that is To Be Subcontracted, eg; plumbing & wiring
• A statement that identifies who is Responsible for getting all necessary Permits and ensuring that Inspections and Approvals by local authorities will be done at the proper times (the homeowner is ultimately responsible for making sure necessary permits are in place before work starts)
• A statement that all work will be done according to Local Codes
• A statement that the contractor is responsible for Removing All Debris as soon as construction is completed
• A clearly itemized Payment Schedule including any holdback provisions under the Builder’s Lien Act
• A statement of all Warranties explaining what is covered, for how long and what will be done if there are problems
• A Certificate of Insurance showing the contractor’s public liability and property damage insurance
• If the renovations involve a substantial amount of money, you may want to consider Additional Protection such as a Performance Bond in the event the contractor fails to complete the work
• The contractor’s Workers’ Compensation Board number (we’ve been providing a certificate of clearance at the start of our projects and at completion)
• A statement outlining any Cancellation Rights
• A statement outlining how Problems will be Resolved
• Your Signature and that of the Sales Representative
• The date the agreement is signed and where the agreement is signed
• Contact your insurance agent
• Addition on front can’t be more than 1.5m deep from front of house
• Addition on the back of the home cannot be more than 4.6m deep
• Not more than 40sq m on the main level
• Upper level can’t be more than 10 sq m
• Roof height on upper level can’t pass existing roof height
• Roof height on main floor can’t pass 6m high

Depends on project, I would have to confirm all details. However these are the basics.

 

---

PRESENTER:
Bonnie Pratt - The Canada Revenue Agency (CRA)

---

There are going to be a number of you who think that someone from the Tax Dept will cheerful give up television or recreational pursuits for the opportunity to spend an evening nagging each of you about your obligations under the Income Tax Act.  But I’m going to share how I, a civil servant and tax auditor, personally stays grounded.

Of all my cousins who live in Calgary, almost all work in the building trades.  So…I know quite a bit about the opinion of subcontractors in the building trades.

Last spring I attended the Canadian Home Builders Association Annual General Meeting in Banff.  I was part of the support team for the Minister of National Revenue.  At the AGM, he was given an award for some good things he did, but he was also advised that the Association was disappointed that CRA is not tougher with the tail-gate builders and renovators who don’t report their income.  It hurts legitimate businesses.

So that is why I am here this evening – to talk about a hidden yet robust part of our economy.

It goes by many names:

• The black-market
• Moonlighting
• Shadow trades
• Working under the table
• Jobs for cash

The concept is simple.  The underground economy exists wherever people or businesses ignore tax laws to gain an unfair advantage.  By undercutting the competition and refusing to report their full income, they are breaking the law. Businesses and individuals need to report their income from all sources - legal or illegal —even if they are paid in cash or bartered services.

The Underground Economy is comprised of:

• Businesses that do not properly collect taxes
• Businesses that do collect taxes but do not send collected taxes to the Government
• Individuals who do not pay sales tax on purchases
• Individuals or businesses that misrepresent income to tax authorities
• It covers largely that portion of business activity that is associated with the supply of goods and services for cash

Let me give you a real life example:

My Mother is now 88 years old. Mom lives, on her own, in Whitehorse Yukon.  Last winter after her driveway was snowed in for several weeks, she decided to make her own arrangements to have it ploughed.

She managed to independently find someone with a bobcat who came and spent an hour or so on a Saturday.  When he had completed the job, he brought in his invoice book, told her she owed him $100.00.  He asked my mother “How will you be paying?  Cheque or Credit Card”?  “Oh”, Mother replied, “I pay in cash”.

“Well, Mrs. MacDonald I am going to give you a 10% discount!”

Next he asked what name he should put on the receipt.

“I don’t need a receipt” says Mother.

“Well, Mrs. MacDonald, I am going to give you an additional 5% discount”.
My mother shared this event with me because she was proud she had made her own arrangements AND she also found a businessman who showed respect to a senior.

How many of you think that income got reported; and so what, one customer, one job.  But what if it wasn’t a series of $100 jobs but a series of $1,000 jobs, or $10,000 jobs?

Why do You Care as a Canadian Citizen?

Every time someone goes ‘underground’, everyone else ends up paying more. This places an unfair burden on law abiding businesses and individuals.  With less tax collected, the government has less money to spend on the services and benefits that you, your family, your community rely on every single day.

The Underground Economy:

How big is the hidden economy in Canada?  This question intrigues many people; not just the tax department but also academics.  Some business schools periodically design financial models to estimate the amount of income earned in Canada – each year - that is not reported.  One professor was interviewed a year ago on CBC.  Based on his model, in 2008, the dollar value of annual economic activity not reported was estimated to be $200 billion – and up!

Ten years earlier, in 1997, the Frazer Institute, conducted a similar exercise and calculated unreported economic activity in the range of $70 to $100 billion per year.

Next, let’s talk about the micro-level: how operating in the underground economy affects us as individuals.

Drawbacks of Working Under the Table - for the Worker, for the Businessman, for the Customer

Worker, tradesman, labourers: These folks need to shy away from working under the table. If they were ever hurt while working for a boss who pays them cash, this could mean not being able to claim Workers’ Compensation or Employment Insurance. No more income! Cash employers don't offer medical insurance or dental plans. These people will be on their own.

Even if they haven't reached the stage where they are considering buying a house, starting a business, or retiring, they need to think about it now. They all require a responsible track record and proof of income.  Without them, they are out of luck! Working under the table can be hazardous to a person’s career and future.

A tradesman’s career rests on his reputation. Imagine trying to find a job or start a new business if any of the following were true:

• Person owed thousands of dollars in fines and penalties;
• All their assets—like tools and trucks—were seized;
• Their name appeared in the paper as a convicted tax cheat;
• They wound up in jail; or
• Prospective employers and clients knew the worker was subject to greater scrutiny and enforcement in the future?

As a businessman:

• Difficulty securing personal or business loans (the business shows little or no income);
• No health benefits or insurance;
• No coverage by Workers' Compensation;
• Reduced Canada Pension Plan benefits at retirement; and
• Constant threat of prosecution.

As a customer:
There are many experienced and reliable contractors working in your community—highly skilled professionals who do business the right way. But not all contractors play by the same rules. Some cut corners to offer low prices as long as nothing is written down, and you pay them in cash. You should know about the risks involved in "under-the-table" cash deals before you decide to hire a contractor.

• shoddy workmanship with no receipt means no recourse;
• no warranty; and
• being liable if someone is injured on the job.

If your contractors are willing to cheat the government, are they willing to short-change you too?

Having a written contract gives you control over your renovation or construction project, and is a good way to protect you and ensure long-term satisfaction.

But perhaps the most compelling reason to pay your fair share of taxes is that they form the foundation of a strong and resilient economy, even when times are tough.

Let’s talk first about the macro level: how this affects the economy of an entire country.

In April, 2010, I was listening to CBC – Calgary Eye-Opener – business segment.  A TV reporter who covered the 2004 Athens Summer Olympics stated that he never really thought about how extensive the underground economy was in Greece until he had to file his expense claim for his trip.  He said, “I realized I had no receipts to document my expense claim.”

Greece became the poster child for countries in which the underground economy is rampant.  In spring, 2010, and ever since then - all eyes are on Greece.

Greece  has become an edge-of-the-seat cliffhanger.  The crisis deepens, appears to lessen, then deepens.  In 2010, investors feared that a run on Greek debt would trigger a domino effect, plunging the entire European continent into a recession. They feared that situation, in turn, would harm America's ability to export, would increase the U.S. trade deficit, and start a new wave of economic chaos. The European Union intervened then and must do so now.  They can’t afford not to.  In 2011, the situation is much worse.

Globe and Mail – Friday, October 21, 2011.

EU ponders 60% haircuts for Greek debt.

“Greece’s economy has deteriorated so severely in the last three months that international lenders would have to find €252-billion ($353-billion) in bailout loans through the end of the decade unless Greek bondholders are forced to accept severe cuts in their debt repayments.

The dire analysis, contained in a “strictly confidential” report by international lenders and obtained by the Financial Times, is more than double the €109-billion in European Union and International Monetary Fund aid agreed to just three months ago.”

 

---

PRESENTER:
Reah Blair-Halmazna - The City of Calgary, Compliance Services

---

Reah discusses crucial information about contractor fraud, how homeowners are protected, and what they can do to prevent it.

BEFORE You Commit, Make Sure They’re Legit is a brochure written by the City of Calgary that provides useful links and other information pertaining to fraud and how you can prevent it from happening to you.

Download the brochure

 

 

---

PRESENTER:
Doug MacCallum of Remax Realty

---

Doug has been in the industry since 1986 with Canada Trust Realtor. He joined Remax with his wife Roz in January of 2000. In 1994 Doug and Roz were awarded the #1 Referral Networking in closed Sales in Canada with Coldwell Banker.

Should I stay or should I Move? Picture yourself in the kitchen at the table drinking coffee or tea… Ask yourself , do you like your home and your neighborhood? If so - fix it, if not - move. If you like your home what would it cost to get it looking modern?

Property values for an average home in 1986 were around $100,000 in Calgary. Same home today is selling for $400,000.+

My research based on today’s $400,000 home with 1% put away each year for the last 25 years you would have about $50,000+ or more in your basic maintenance renovations account.

Any home requires a budget based on 1-2% annually of your estimated Home Value. You should build a budget over a 25 year cycle, condos do!

What home would not need a total upgrade after 25 – 35 years.? Windows, Doors, Siding...

2 types of maintenance that people do:
• Continuous or Active Maintenance
• The other is Deferred Maintenance

Is it Personal or is it Investment?
Personal; adding the swimming pool, the hot tub room, the sauna. These are little or no money back personal features. (You should plan to live there at least 5-10 years to enjoy personal features.)

Investment; these are money back maintenance renovations; bathrooms, kitchens, flooring, what ever the standard is in the neighborhood.
Upgrades like adding the premium granite from Italy or the exotic hardwoods from Brazil, upgrading over and above current trends may result in little return. That too is personal.

Remember: there are 2 first impressions of a home
1st When you drive up!
2nd When you open the front door!

 

---

PRESENTER:
Anne Gannon of The Better Business Bureau

---

How to use the Better Business Bureau when hiring a contractor:

People are concerned about finding a reputable company, so a lot of people ask us if a business is ‘legit’. They are not necessarily asking if a company is incorporated or licensed, but are they going to do a decent job, or are there going to be problems, maybe lose money over the deal?

That is something we cannot tell them. One person might have a good experience and the next a difficult one. We might not even have a record to help people decide who to use as we don’t keep records on every company –  the reason is that we are a database , not a corporate registry. If we don’t have a record of the company, all we can say is that the company has had no complaints recorded by the BBB and give you some advice. We have even had people call as the doorbell was ringing, as it has just occurred to them to do a check and they want last minute reassurance.

Contractors you hire should be honest, do what they promise and be responsive to problems. So while we can not guarantee you will not run into a problem even if a company has a good BBB report, we do make it possible to find out some information. A business review usually comes with a rating for that company. Ratings are based on factors that might increase or decrease the level of trust; that would include contact information, licensing, how long they have been in business, the outcome of  complaints we have processed, if they are not advertising honestly and if there has been any governmental or regulatory action.

Many people misunderstand the public role and the scope of the BBB in relation to dispute settlement, which is to facilitate the resolution of complaints between businesses and their customers as well as report on companies in our database and provide consumer education. In this way, we foster trust in the marketplace, by getting parties in dispute to try to sort things out. The BBB has been around since about 1912 in North America and 1954 in Calgary, so we have some experience in this field,  but it is important to realize  we are an independent organization, a non-profit and not a government agency. We do co-operate with and refer people to other agencies, but we have no power to order settlements.

BBB Complaints:

BBB Accredited Businesses must respond to complaints and do their best to resolve them. Non-accredited businesses do not, but most companies respond to complaints. In our experience, most of our contractor-related complaints are about sub-standard work, defects not attended to, significant delays and unfinished work, and so involve requests for refunds, to pay for someone else to finish the job or refusal to pay the balance. This can lead to accusations of breach of contract, liens and civil suits.

Most provincial charges under the Fair Trading Act are around lack of the appropriate licence, misrepresentation, not refunding money when required to do so and not having a contract that complies with the Act.

Tips on Hiring a Contractor:

These are some of the things to take into account when hiring a contractor:

• Full contact information and not just a cellphone  - track down?

• Get at least three quotes to get an idea of the average price. You cannot ask for your money back because you discover someone else would do it cheaper.

• Ask for references.

• Are they licensed municipally and provincially if necessary? The Prepaid Contractors Licence is something a lot of people are unaware of, but a contractor must have one if they are taking money in advance away from their place of business for a project. Any contract signed in your home can be cancelled within 10 days.  If they do not have a PPCL, you are entitled to your money back.

• Do they have a detailed contract and does their contract comply with the Fair Trading Act, as mentioned? You would be surprised how many people have no written contract, or no copy of whatever they have signed, along with a large withdrawal from their credit card and nothing to show for it. All questions about provincial licences and contracts is to be found at www.servicealbert.ca or 1-877-427-4088.

• Have they had complaints? If so, were they resolved?

• You have heard about the importance of permits:

• Are they affiliated with their trade association? It shows they care about standards.

• Be suspicious if someone is going door to door, especially in established areas where there might be a high population of seniors and doubly if they ask for money in advance or try and scare you into having work done or claim to be from the city or gas company. If you live in a rural area and were solicited at your door, check with the RCMP to see if others have reported problems.

Liability:

Find out whether the contractor carries liability insurance. Contractors are NOT obliged by law to carry liability coverage, so damage done to your property or your neighbour's property by the contractor may not be repaired if no coverage exists. Ask the contractor for the name of their insurance company and their policy number and then verify with the insurance company. A homeowner cannot be sued, unless he did something to make him liable for a worker injured on his property. However, if you are concerned if a contractor carries Workers Compensation Board coverage, check with the WCB in Calgary.

Warranties:

You need to avoid scenarios like this in relation to warranties. Ask for a written copy of the contractor’s warranty, and review it carefully for answers to the following questions:

• Does it cover the materials supplied, the labour involved in the installation, or both?

• Who is supplying the warranty - the contractor or the manufacturer of the materials?

• How long does the warranty last and is it transferable to new home owners in the event of a house sale?

We just had a complaint about a leaky roof from the new owner of a house, but he did not have the warranty and we did not know if it was transferable or not when the company refused to do anything.

Liens:

Once you’ve gone ahead with the project, there are a few more pieces of advice that BBB would offer.  If a contractor does not pay his suppliers and sub-contractors, liens may be placed on your property. Unfortunately sometimes you are the innocent victim. Therefore, before you make a final payment at the conclusion of the work, check your property title record at the nearest private registry. Then, depending on the outcome, do one of the following:

• If no lien has been registered, pay the contractor the amount of the bill, less 10%. Withhold this 10% for 45 days after the work has been completed. After 45 days, check your title record at a private registry, and if no lien has been registered, pay the 10% holdback money.

** The Builders' Lien Act (Chapter B12, 15a) makes allowance for a "holdback". However, if you plan to withhold 10% of your payment for 45 days, you should mention this to your contractor when you are discussing the work to be done and prior to signing the contract or,

• If a lien has been registered, do not pay any money for the work or materials until the lien claim has been settled. Talk to a lawyer for advice on the best way to settle the claim and remove the lien from the title record. There are two ways to remove liens. First, you can pay the money claimed or negotiate a smaller amount to settle the claim. Once paid, make sure the discharge papers are filed. The second way to remove a lien is to go to court.

Before making the final payment and signing a completion certificate or any other document that releases the contractor from further responsibility, make sure everything you have been promised is complete.

In conclusion, to get the most out of the BBB:

Look at/call for the company’s report and compare BEFORE you hire a company – call if necessary to clarify anything. We understand people in business are likely to get a complaint once in a while and one resolved complaint for a small company in business for a while is nothing to be worried about generally. Our website is: www.calgary.bbb.org or just www.bbb.org and our phone number is (403) 517-4222.

Look at the  report on how to hire a contractor on our website with general information . Also if you need a quote, use our EQuote service.

File a complaint once you have exhausted direct contact -  as mentioned, we can facilitate a dispute settlement  – we do offer mediation and arbitration for unresolved cases – but we can’t enforce a settlement. We offer an alternative to court when the parties want to settle quickly, but some people will find they need to use the other option: court services.