Renovation scams, deposits and progress payments

Most renovation money is lost in two moments: at the front door, and on the day an invoice arrives with new bank details. Neither needs a bad contractor. Both need someone in a hurry.

This is planning information, not legal advice. Consumer protection rules are provincial, and the ones below are Ontario's and Alberta's. If you have already paid someone you now doubt, call your provincial consumer protection office and your bank today.

A rebate is never a reason to sign at the door

The pitch is usually a free assessment or a government rebate that expires soon. Natural Resources Canada says it never solicits by phone, email, or in person to enter homes or sell heating and cooling equipment, and that EnerGuide service organizations do not sell door-to-door. Hydro-Québec says the same about LogisVert: if you did not contact them first, it is probably fraud.

The new federal National Heat Pump Rebate is not open. Environment and Climate Change Canada says applications start through an online portal in early 2027, with rules due on 1 November 2026. Until that portal opens there is nothing to sign up for at your door, and nobody needs your utility bill to put you on a list.

• Ask for photo ID and the company name, and check that it matches the contract
• Do not hand over a gas or electricity bill. It carries your account number
• A limited-time price is a pressure tactic, not a program rule
• Close the door. A real program will still be there next week

Ontario: what cannot be sold at your door

Under Ontario's Consumer Protection Act, a business cannot sell or lease you a furnace, air conditioner, air cleaner or purifier, water heater, water treatment device, filter or softener, or duct cleaning at your home unless you contacted them first and invited them to make that sale. A contract signed after a banned door-to-door pitch is void, and you can keep the equipment without paying.

For anything over $50 sold at your door or in your home, you have a 10-day cooling-off period that starts when you receive the written contract. If the contract is missing the required information, you can cancel within a year. Utilities, municipalities, and government agencies do not send salespeople door-to-door.

Alberta: prepaid contractors need a licence

In Alberta, a business that sells home renovation work away from its own premises and takes money before the work is finished needs a prepaid contracting business licence. The City of Calgary puts it plainly: a contractor asking for a deposit or progress payments must hold one. Salespeople must carry an ID card showing the licence number. Alberta also bans in-home sales of furnaces, air conditioners, water heaters, windows, and energy audits unless you invited the business.

1. Ask for the prepaid contracting licence number before any money moves.
2. Check it with Service Alberta's licensed business search, or call the Consumer Contact Centre.
3. Before the final payment, check your title for builder's liens.

The changed bank details invoice

This one arrives mid-project. An email that looks exactly like your contractor's says their bank changed and the next draw should go to a new account. The Canadian Anti-Fraud Centre lists it as a supplier and contractor swindle: the sender's address is spoofed, and the money goes to the fraudster.

Phone the contractor on a number you already have, not one in the email, before you pay any new account. Make it a rule in the contract: payment details change only in person or on a signed change order.

Deposits: what is law and what is practice

We found no hard cap on renovation deposits in Ontario's or Alberta's consumer rules. Ontario's consumer ministry recommends that deposits be no more than 10 percent of the total project cost, and Ontario contracts over $50 have to be in writing with the payment schedule and deposit stated. That is guidance, not a ceiling.

The planning practice that protects you is simple. Pay a small deposit tied to ordering materials, then pay for work that is done and that you or an inspector can see. A contractor who needs a third of the job upfront to start is asking you to finance their business.

Illustrative schedule: a $30,000 bathroom

These three schedules are illustrative planning schedules, not a legal standard. Each payment follows a milestone you can inspect, and each adds up to the contract price.

• Deposit when materials are ordered: 10 percent, $3,000
• Demolition done and rough-ins passed inspection: 35 percent, $10,500
• Tile and fixtures installed: 35 percent, $10,500
• Substantial completion with a written deficiency list: 20 percent, $6,000
• Total: 100 percent, $30,000

Illustrative schedule: a $75,000 kitchen

• Deposit when materials are ordered: 10 percent, $7,500
• Demolition and framing done: 20 percent, $15,000
• Rough-ins inspected: 20 percent, $15,000
• Drywall complete: 20 percent, $15,000
• Cabinets and finishes installed: 20 percent, $15,000
• Substantial completion: 10 percent, $7,500
• Total: 100 percent, $75,000

Illustrative schedule: a $150,000 basement suite or addition

• Deposit when materials are ordered: 5 percent, $7,500
• Demolition and structural work: 15 percent, $22,500
• Framing and rough-ins inspected: 20 percent, $30,000
• Insulation and drywall: 20 percent, $30,000
• Finishes: 20 percent, $30,000
• Fixtures and millwork: 15 percent, $22,500
• Substantial completion: 5 percent, $7,500
• Total: 100 percent, $150,000

In Ontario, holdback comes off every draw

Section 22 of Ontario's Construction Act makes each payer keep back 10 percent of the value of work and materials as they are supplied. On these three jobs that adds up to $3,000, $7,500, and $15,000, held until the lien period ends. It is not your contingency and it is not a late payment. Other provinces have their own lien statutes and their own dates.

Red flags that should stop the cheque

• Cash only, or a discount for cash
• A large payment before any work or materials arrive
• No written contract, or a one-line quote
• Pressure to sign today
• We will apply for your rebate for you
• New bank details by email

If two of those show up on the same job, do not negotiate them away. Walk, and check the next contractor's licence, insurance, and workers' compensation clearance before you pay anyone.