A bizarre news story out of Shoreham, England, serves as
a powerful reminder that the failure to have a signed home renovation
contract can create significant problems for both the owner and
contractor.
The drama began late last year when Anita Dovey
hired builder Nigel Gray to add a porch and a conservatory to her
council house. (In the U.K., a council house is a form of public or
social housing built and operated by municipal councils. Eligible
tenants obtain secure leases at below market rents.)
Gray quoted Dovey £15,000 (about $30,500) for the job, but when it was completed he had difficulty obtaining payment.
After
receiving a couple of NSF cheques, Gray gave up trying to get paid for
the job and obtained permission from the local district council to
knock down the porch and repossess the conservatory.
In April, in
the presence of a crowd of photographers, Gray and his crew used
sledgehammers to demolish the brick porch and its red-tiled roof, and
remove the conservatory from the house.
Gray said, "The only
reason I am smashing it down is because there is no way I am going to
be mugged off." (Urbandictionary.com defines "mugged off" as the way
someone reacts after being offended, insulted or disrespected.)
A spokesperson for the local council said that Dovey would be billed
for the cost of restoring the property back to its pre-renovation
state.
Following considerable media attention, Gray donated
what is now Britain's most famous conservatory to the Argus Appeal, a
local charity, where it will be auctioned off to the highest bidder.
Harvey
Kirsh is a senior partner at Osler Hoskin & Harcourt in Toronto,
and a recognized specialist in construction law. Last week I asked him
whether a similar outcome could occur on this side of the ocean.
"The simple answer," he said, "is no, not in Canada."
Kirsh
explained that an unpaid contractor has a choice of remedies in Canada,
including court action for collecting unpaid funds or registering a
construction lien. A self-help remedy such as demolition or removal of
the improvement exposes the contractor to criminal charges and a claim
for damages caused by the removal.
In England, Kirsh said,
there is no construction lien legislation which would entitle a
contractor to take legal action against the lease of a tenant in a
council house.
Fortunately, there is no shortage of good advice
available for both contractors and owners or tenants contemplating a
renovation in Ontario.
One of the best sources of information
I've found is the website of Canada Mortgage and Housing Corporation
(CMHC) at cmhc-schl.gc.ca.
Click on consumer and choose
renovation as a topic. CMHC offers renovation guides, videos,
energy-saving tips, fact sheets, inspection checklists, financing
options, and details on getting refunds of part of the mortgage loan
insurance premiums for energy-efficient renovations or home purchases.
Best
of all is a sample renovation contract. CMHC says that a detailed
written contract between the homeowner and the contractor is essential
to any renovation or home repair project, no matter its size. Even the
smallest job should be put in writing.
For a home renovation
project, the CMHC contract template and the accompanying commentary are
just as good as any of the expensive ones in my law library.
Topics
covered include a description of the work, responsibility for obtaining
permits, timing, terms and timing of payment, change orders, washroom
facilities for the workers, standards of work, warranties, workers'
compensation compliance, insurance, default, and – most important –
dispute resolution.
There is no section in the sample contract about demolition of the work in the event of nonpayment.
Bob Aaron is a sole practitioner at the law firm of Aaron &
Aaron in Toronto. Bob specializes in the areas of real estate,
corporate and commercial law, estates and wills and landlord/tenant
law. His Title Page column appears Saturdays in The Toronto Star and weekly on Move Smartly. E-mail bob@aaron.ca
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June 16, 2008
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