Contractor Concerns Continue Throughout Alberta

Rainbow Investigations continues to receive many inquiries, and in fact are working on numerous files regarding less than honourable home construction contractors operating in Alberta. While, of course, most of our inquiries are in and around Calgary, and southern Alberta, but we can report we have had recent inquiries from rural areas away from Calgary as well.

Many of the inquiries concern the quality of work of the contractors, but other topics that have been brought to our attention include misunderstandings of the pre-paid contractor requirement under the Alberta Fair Trading Act, the lack of pre-paid contractor licenses by certain contractors, misunderstandings of the use of builder’s liens by contractors, and the failure of subcontractors to be paid properly by primary contractors.

Also, a area of huge concern is that many consumers are using us to hunt down contractors who have simply abandoned projects, often with monies deposited by the consumer in advance of the project being finished. In many of these projects, the involved contractor simply moves on to a more profitable project. Unfortunately, where we have a situation where the demand for construction exceeds the supply of qualified workers, this kind of scenario sometimes develops.

We will try to provide some information regarding these topics in this story:

Pre-paid Contractor Licenses – While many people familiar with the Fair Trading Act in Alberta have assumed that any contractor taking a “retainer” or an upfront payment is required to have a Pre-Paid Contractor License, in actual fact that is not absolutely correct. The current law makes a distinction as to where the contract is signed. If the contractor contract is signed “at the contractor’s place of business” ie their business office, or their retail store, or their house, if they operate from their house, then the Pre-Paid Contractor License requirement technically does not apply.

In situations where the contractor meets the consumer at the house where the work is to be done, and the contract is signed there, then the contractor needs a Pre-Paid Contractor License, and the contract itself is considered a Direct Sales Contract, as defined in sections 26 to 35 of the FTA.

The typical situation that we run into is where the contractor’s office or home is nowhere near the consumer’s house is, and usually the contract is in fact signed at the consumer’s place of residence after an inspection of the potential worksite. However, to give one example of how the current law is sometimes is abused, in one situation in a small town in Alberta, the contractor assesses the job on site at the consumer’s house, and then requests the consumer to come across town to the contractor’s house to sign the contract.

Obviously, Rainbow Investigations has concerns if this distinction as to where the contract is actually signed is really in the public interest, given the Alberta situation today. In our view, all contractors accepting pre-payments should be licensed irrespective of where the contract is physically actually signed.

Consumers can check to see if a contractor has a Pre-Paid Contractor License here, and the Service Alberta tip sheet on home renovators is here. Finally, the Canadian Home Builders Association has some information on hiring contractors here.

Builder’s Liens - A contractor can place a lien on a property under the Builder’s Lien Act, if he has not been paid for what he legitimately feels are the costs of the construction. However, there appears to be much confusion, particularly among consumers who have recently had a lien placed on their property, about the effect and process of the lien.

While of course the lien may have an effect if you are immediately trying to sell your house, or if you are renewing your mortgage. However, if that is not the case, and you do not agree with the contractors’ assessed claim for the work, you should seek legal advice BEFORE paying the lien.

Of course Rainbow Investigations should not be giving overt legal advice, but we will just point out that under section 43 of the Builder’s Lien Act, the contractor must act on the lien within 180 days or the lien will expire. Some information on Builder’s Liens is here.

Sub Contractor’s Not Being Paid - Rainbow Investigations has had these kinds of inquiries lately, especially in situations where the hiring contractor directs the subcontractor to do a project a certain way for reasons of getting the project done quickly. Then, in the typical scenario, the work may not pass an inspection, and the subcontractor is brought in again, but has trouble getting paid for both work situations.

In these type of situations, we need proper invoices and documentation, separated by materials and labour, of what was done, so we can pursue the debtor. In some cases we have had to work with hand written pieces of paper, and we need better documentation than that.

Abandoned projects – Unfortunately, this is probably our most frequent request, to pursue contractors who have simply abandoned projects. In most cases, the involved contractor has found bigger fish to fry, and moves on to more profitable projects.

We can say we are very good at finding and either suing or getting settlements from these types of contractors. Remember, we can represent you all the way through the law suit process if the claim is $25,000 or less (or for reasons of cost, you wish to only pursue to $25,000).

If your claim is above $25,000 you will have to sue in Queen’s Bench, and will require a lawyer. We can and do recommend lawyers who we have worked with over the years.

Date of Story: Wednesday, May 14, 2008
Story Posted By: Ron Reinhold
Source: Ron Reinhold

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