Before you sign on the dotted line
Signed contracts, estimates and loan applications are legally binding. If you have any doubts, do not sign anything.
Most companies using the direct sale approach are reputable businesses that hire competent staff, perform quality work and ensure that their clients' rights are respected. However, misunderstandings can lead to problems. You can avoid difficulties by following these tips:
- Ask to see a direct seller's licence. The Consumer Protection Office licenses vendors engaged in direct selling and also licenses sales representatives who act as direct sellers.
- Get two or three detailed written estimates. Tell contractors that you are getting other quotes. Remember that written estimates do not require your signature. Compare what each company has to offer. Be especially cautious of extremely low estimates that could mean compromises in material or quality of work.
- Think about the offer before you sign. Take some time to talk it over with friends or relatives without any pressure from the salesperson.
- Consider contacting a lawyer before you sign a contract for work amounting to hundreds of dollars or more. Be sure that you understand your legal obligations before you sign.
- Check into each company you are considering hiring.
- Find out who does the actual work. A seller may sell a signed contract to another company.
- Check with the Consumer Protection Office regarding licensing.
- Call the Better Business Bureau to see if they have received any complaints about any of the companies you are considering.
- Contact references and look at the work done for them. Although the company will likely give you only the names of satisfied customers, you may learn what pleased them. What would they do differently the next time and why?
- Be careful with down payments. A 10 per cent down payment is reasonable. It is a good idea to pay by cheque. A cancelled cheque is a legal receipt. Remember your right to cancel a direct sales contract within 10 days. After you sign a direct sales contract, you have 10 days (excluding the day you sign) to gather facts about the company, to get other estimates or to change your mind. You do not have to give the company your reasons for canceling the contract.
- Protect Yourself Against Property Liens. The Builders' Liens Act covers residential construction on contracts over $300. You are entitled to hold back 7.5 per cent of the total cost of work, services and materials for 40 days after the contractor has reached substantial or total performance of your job.
- Suppliers or employees of the contractor can file liens against your property if, for some reason, the contractor does not pay them. A lien gives an unpaid worker or supplier the right to make a claim against your property for wages or costs.
- If a supplier or employee files such a lien, you can use the money that you held back to pay.
- Refer to The Builders' Liens Act for more detailed information or call Queen's Printer at 204-945-3101 or email queensprinter@gov.mb.ca for information.
- Pay for work as it is done. Never prepay in full. If your contract calls for progress payments, be sure that work is done before you pay.
- With each progress payment, have the contractor sign a statutory declaration that creditors and workers have been paid to date for materials and work on your project. These forms are available at business stationery stores.