How you structure contractor payments is the second-biggest financial decision in any renovation (after total budget). Here's what's industry-standard in Ottawa for 2026, and the payment-term red flags to refuse.
Small projects under $15K: 10-25% deposit + balance on completion. Medium projects $15K-$100K: 10-20% deposit + 2-3 progress draws against milestones + 10-15% final on completion. Large projects $100K-$500K: 5-15% deposit + 4-6 milestone draws + Construction Act 10% holdback (45 days post-completion). Custom homes $500K+: 5-10% deposit + 8-12 milestone draws + 10% holdback + lawyer-managed trust account.
Tie payments to verifiable work-in-place, not arbitrary dates. Examples for kitchen reno: Draw 1 — demolition complete + rough plumbing/electrical inspected. Draw 2 — cabinets installed + countertop templated. Draw 3 — backsplash + appliances installed. Final — punch list complete + occupancy certificate (if applicable). Each draw requires written verification before release.
10% deposit ($6,000): on signing (funds permit + design + cabinet ordering). 20% draw ($12,000): demolition complete + rough M/E/P inspected (4-5 weeks). 30% draw ($18,000): cabinets installed + drywall closed + paint underway (8-10 weeks). 25% draw ($15,000): countertop installed + appliances connected + tile complete (12-14 weeks). 15% final ($9,000): punch list cleared + final cleaning + warranty documentation provided (16-18 weeks). On $60K project (under $50K Construction Act threshold), no...
10% deposit ($20,000) signing. 15% rough framing complete + windows in ($30,000). 15% rough M/E/P inspected ($30,000). 15% insulation + drywall complete ($30,000). 15% kitchen cabinets + bath fixtures installed ($30,000). 10% finishes substantially complete ($20,000). 10% holdback ($20,000) — released 45 days post-completion under Construction Act. Each draw requires GC-prepared progress invoice + your written verification of completion.
(1) 50%+ deposit on any project. (2) Progress draws tied to dates instead of milestones. (3) Final payment due before substantial completion. (4) No Construction Act 10% holdback on $50K+ projects. (5) 'Materials advance' over actual material cost. (6) Cash-only payment requests. (7) Refusal to provide receipts for cost-plus work. (8) Subcontractor lien waivers not provided before final payment. (9) Auto-deduction from credit card or bank without manual approval. (10) Late payment penalties exce...
Common request: 'I need the next draw early to pay my subs.' Response: 'I'll release the draw when the milestone is verifiable complete per our contract.' Pushing back protects you from contractor financial failure (a contractor who can't make payroll without your early draw is at high risk of disappearing mid-project). Maintain your payment schedule discipline; this is the single most important habit to prevent project disaster.
10-20% deposit + 2-6 milestone progress draws + 10-15% final + 10% Construction Act holdback (45 days post-completion, projects over $50K). Tie all draws to verifiable milestones, never to calendar dates.
No — 50% deposits are a financial-trouble red flag almost universally. Reputable Ottawa contractors with healthy cash flow don't need that much upfront. 10-25% deposit is industry standard.
Mandatory under Ontario Construction Act for any project over $50,000 — homeowner holds back 10% of each progress payment for 45 days after substantial completion. Funds any subcontractor lien claims. Released to GC if no liens registered during 45-day period.
Yes — best protection for deposits (chargeback rights under credit card terms). Many Ottawa contractors charge a 2-3% surcharge for credit card payment. Trade off: surcharge cost vs chargeback protection. For deposits and small projects: credit card recommended. For large progress draws: cheque is standard.
Respond: 'I'll release the next draw when the milestone is verifiable complete per our contract.' Don't break payment discipline. A contractor who can't make payroll without your early payment is at elevated financial-failure risk.