According to a recent article, Ontario Provincial Police are investigating a case of contractor fraud in Caledon. Here, an individual paid a $12,000 deposit to an Ontario contractor who, after delaying the project for two years, stopped returning the calls and failed to finish the job.
Contractor fraud cases are concerning for homeowners and, unfortunately, not uncommon. So, what happens when you’re the victim of contractor fraud? Below, we’ll outline your rights under the Consumer Protection Act, 2002, the steps you can take if you think you have been the victim of contractor fraud, and helpful tips for hiring contractors in Ontario.
What is Contractor Fraud?
First, you might be asking: what does contractor fraud look like? In the residential real estate context, contractor fraud is when a contractor misrepresents their work or otherwise engages in illegal activity. Examples of contractor fraud typically involve contractors accepting a deposit or payment for services and failing to start the project, misrepresenting the work, or abandoning the project entirely.
The Ontario government has provided a list of common home renovation scams to help consumers identify potential contractor fraud. Review the Ontario government’s list of common home renovation scams to learn more.
The Consumer Protection Act and Contractor Fraud in Ontario
In Ontario, the Consumer Protection Act, 2002, SO 2002, c 30, Sch A outlines basic rights for most consumer transactions. We’ve covered consumer rights under the Consumer Protection Act, 2002, relevant to contractor fraud below.
The Consumer Protection Act and Contractor Misrepresentation
It is illegal for businesses to provide false information about themselves and the services they offer. In the contractor context, this can extend from anything to their licences and accreditation to claims regarding the product they deliver.
The Consumer Protection Act and Completion of Projects
A contractor is expected to deliver a finished product within 30 days of the specified delivery date (in this case, completing a project); otherwise, the consumer is eligible to request a refund. Contractors are also not allowed to charge for services that the consumer has not requested.
The Consumer Protection Act and Contracts
The Consumer Protection Act, 2002, requires that agreements for home renovations over $50 are in writing. In other words, you’ll need to get a signed contract. To ensure your rights are protected, the contract must include, at a minimum, the following:
- The terms of the agreement
- Fees and applicable taxes
- Estimates (note: you cannot be charged more than 10% of the written estimate without agreeing to it)
If a contractor intends to change the contract (for example, if they need more time to complete the project), they must provide you with written notice. You have the right not to accept changes despite being provided with written notice.
Finally, note that if you sign a contract for a home renovation or repair in your home, you have the right to a 10 calendar-day cooling-off period. This means that you can cancel the contract within those 10 days without paying cancellation fees. However, if the contractor has already started work, you will be responsible for compensation for any work that has already been done.
The Consumer Protection Act and Delays
A service provider must start their services within 30 days of the date specified in the contract (or, if the contract does not have a specified start date, within 30 days of the date you signed the contract). If the contractor fails to begin work within 30 days, you have the right to cancel the contract before they start the services.
What are My Rights Against If I Am the Victim of Contractor Fraud?
If you believe you are the victim of contractor fraud in Ontario, start by filing a complaint with Consumer Protection Ontario. You will receive a response within 15 business days. Complaints are reviewed case-by-case to determine what action will be taken.
Depending on the circumstances, you may have a legal cause of action against the contractor (for instance, if they took a deposit from you without performing work). In that case, you will want to speak with an experienced construction lawyer to determine what steps can be taken to resolve the dispute.
Note that even if your contract states that you must use a private arbitration process to resolve complaints – rather than bringing a court action or seeking assistance from Consumer Protection Ontario – you are not bound by these clauses when dealing with a consumer protection issue. While arbitration is a great alternative dispute resolution option, it’s important to understand all of your options when dealing with contractor fraud.
What You Need to Know Before Hiring an Ontario Contractor
Doing your due diligence before hiring an Ontario contractor isn’t just good practice for avoiding fraud. Getting all of the information you need beforehand will help you make an informed decision and minimize the risk of added costs or surprises later on! Here are just a few tips to consider when hiring a contractor in Ontario:
- Ensure the contractor is qualified to do the job – request proof of certification to ensure you are satisfied with their qualifications.
- Check resources like the Consumer Beware List and recent Consumer Protection Act charges and convictions to see whether there are any complaints or charges against the contractor.
- Take your time – do not make on-the-spot decisions about hiring a contractor. Consider shopping around and obtaining detailed estimates.
- Confirm what the contractor expects of you – for instance, will you be responsible for obtaining building permits for the project?
- Obtain a detailed contract – in Ontario, any home renovation that costs more than $50 must be in writing. This is a great opportunity to ensure that the work, costs, respective responsibilities of the parties, and additional details are in writing and clearly outlined.
- Keep contractor down payments to a minimum (the Ontario government recommends 10%). Avoid cash deals – ensure that you have a “paper trail” for payments in case issues arise.
- Do not pay the full contract price before the work is finished.
Finally, suppose you’re planning to hire a contractor for a major renovation. In that case, it’s wise to consult an experienced construction lawyer to review your contract and advise you on your rights before signing the document.
Contact The Construction Lawyers In Ottawa Representing Clients Across Ontario
No matter your role in a construction project, the lawyers at Tierney Stauffer LLP will use our extensive experience working within the construction industry to provide you with practical and effective advice in any construction law matter. We represent clients at all levels of a construction project on transactional matters and will represent their interests in a dispute, if necessary. Contact us online or at 1-888-799-8057 to determine how we can assist you.