The renovation contract is the most important document you'll sign in your entire renovation journey. Most people spend more time reading their phone's terms of service. These are the warning signs that renovation veterans know to look for before signing anything:
Red Flag 1: The Scope of Work Is in Lump Sums
"Living room carpentry works — $8,500" tells you nothing. Without measurements or material specifications, any dispute over what was "supposed to be included" has no factual resolution.
- The Risk: You might assume an item is included while the contractor claims it was excluded, leaving you stuck negotiating or conceding.
- The Requirement: Every major item (wardrobes, kitchen cabinets, etc.) should have dimensions in mm or cm, specified materials (e.g., 18mm melamine), and a detailed scope (number of shelves, hinge types).
Red Flag 2: High or Non-Refundable Deposits
A standard and fair deposit is 10–15% upon contract signing; 20% is the upper end for established firms.
- The Warning: If someone asks for 30–50% upfront before work begins, walk away. This is a classic profile for contractors who fail to complete works or disappear.
- Deposit Terms: While non-refundable deposits are standard, the non-refundable portion should be tied to actual work done rather than the full day-one deposit.
Red Flag 3: No Milestone-Based Payments
If a payment schedule isn't tied to specific completion stages, you lose leverage. Money in a contractor's pocket before work is done often reduces urgency.
A properly structured schedule looks like this:
- 10–15%: Upon signing.
- 30–35%: Upon commencement of hacking/works.
- 30%: Upon carpentry delivery and installation.
- 15%: Upon near-completion.
- 5–10%: Upon defect clearance and handover.
Red Flag 4: Vague Defects Liability Terms
The Defects Liability Period (DLP) should be clearly stated — typically 12 months, with 6 months being the minimum.
- The Problem: A clause saying "we will fix defects" is meaningless without a defined period, a clear process for claims, and a response timeline for rectification.
Red Flag 5: No Clause on Variation Orders (VOs)
Variation orders are extra charges for work not in the original contract. They are legitimate but need strict management.
- The Rule: The contract should state that all VOs must be documented in writing and approved by the homeowner before execution. Verbal authorization should not count.
Red Flag 6: Mismatched Payment Recipients
Always verify that the payment recipient matches the company registration.
- The Danger: If you sign with a company but are asked to pay a personal bank account, you lose company-level accountability and have no recourse through CASE or the Small Claims Tribunal if things go wrong.
Red Flag 7: Rock-Bottom Quotes
An unusually low quote (e.g., 35% cheaper than others) deserves interrogation.
- The Reality: Suspiciously low quotes often mean the scope will be padded with VOs later, or the contractor is desperate for cash flow and will cut workmanship quality to protect their margin.
The Bottom Line
A well-written contract protects both parties. If a contractor resists adding detail or pushes back on standard payment structures, they are telling you something important. Read every clause, and if you don't understand something, keep asking until you do.
