Paying a renovation contractor in Alberta: licences, contracts, holdbacks and liens

Prepaid contracting licences

In Alberta, a business that sells or signs contracts away from its own place of business, for example in your home, and takes money before all the work is done is a prepaid contracting business. It must be licensed with Service Alberta and post security. You can check a licence with the Province's online 'Find a licensed business' search.

Some work is exempt, such as new homes covered by Alberta's new home warranty program, but most renovations sold in your home are covered.

What the contract must include

For prepaid contracts of $200 or more, the contractor must give you a written contract with the full names and addresses of you, the contractor and any salesperson, a description of the work and materials, the total price, the payment terms and the cost of any credit. You must receive a copy on or before the day work starts, or within 10 days of signing, whichever comes first.

Your right to cancel

You can cancel a prepaid contract within 10 days of receiving your copy of the signed contract. The cancellation period is longer if the contractor is not licensed or the contract does not meet the Consumer Protection Act's requirements. Alberta also restricts selling furnaces, air conditioners, water heaters, windows and energy audits door to door unless you invited the seller.

Holdbacks and liens

Alberta's Prompt Payment and Construction Lien Act replaced the Builders' Lien Act on August 29, 2022. Its lien and holdback rules can apply to residential renovations. Under it, an owner holds back 10% of the value of work done, a fund that protects trades and suppliers if the contractor doesn't pay them.

Contractors, subcontractors and suppliers generally have 60 days to register a lien after finishing their work. That is why many owners release the final 10% only once the 60-day period has passed with no liens registered. Discuss the holdback and its release date when you sign, so it isn't a surprise at the end.

Good payment habits

• Tie each payment to a clear milestone, written into the contract.
• Avoid paying large amounts far ahead of the work.
• Pay by traceable methods and keep every invoice and receipt.
• Before releasing the final holdback, search your land title for registered liens.

How Kay2 works

Kay2 provides a detailed, fixed-price proposal and a written contract on every project. Ask us at your consultation to walk you through the payment schedule line by line. For legal questions about your own contract, speak to a lawyer.