The 90% Rule

Are you a homeowner or a buyer? Follow our 90% rule and you'll be 100% less likely to get ripped off. Never pay a contractor more than 90% of the project value until all the work has been completed.

What Does This Mean?

The contractor should always be owed money right up until the project is complete. Keep your contractor coming back for more. If a contractor is owed money, not only will they come back to get the job done, but they will make the completion of your project a priority.

Why Does This Rule Work?

If you give a contractor a deposit, pay the total cost of the project before the final payment or overpay them for completed work, you leave contractors with no incentive to prioritize the completion of your project. Many may then prioritize other work or never return to complete your job, leaving you with an unfinished project, lost money and even higher costs to find a new contractor. The 90% rule incentives contractors to complete your work in a timely manner while keeping your money safe.

Worried About How A Contractor Will React?

Good contractors are okay with you withholding 10% of the project value along the way. In face, a 10% holdback is standard in commercial renovations and construction. Only in residential construction and renovations do contractors get away with deposits, pre-payments, and over-payments that leave homeowners at risk.

Homeowners are seen as easy targets and our 90% rule changes that.

Putting The 90% Rule Into Play

Example:
Our example shows the breakdown of a project and how the milestones may be allocated. The milestones created on a project will be decided by both you and your contractor. Each milestone outlines specific work for your contractor to do and the amount the contractor will get paid upon completion of that milestone. Keep in mind, the actual value of the work being done may be hard to determine.

Project Price

$100,000

Project Breakdown:

Deposit (to start work and to buy materials)

$25,000

After demolition

$25,000

Walls up and painted

$45,000

Finishing touches complete and working (job complete)

$5,000

Using Renovation Trust and the 90% rule, here's how it will work:

Milestone #1: Fund The Project

Deposit $100,000 into your Renovation Trust account

Before the contractor starts work on your project, as the homeowner, you will have to deposit the cost of the project into your Renovation Trust account. At this stage, the contractor will not receive the funds but will know the money is there. By doing this, you avoid giving a contractor a deposit and the money is protected for both you and the contractor.

Milestone #2: After Demolition

Amount to release: $13,500
Scope of work: Contractor to demolish the project area

Actual value of work: $15,000
Amount agreed to release to contractor upon completion of milestone:
90% of $15,000 = $13,500

Milestone #3: Walls Up & Painted

Amount to release: $31,500
Scope of work: Contractor to put up all walls and paint the walls X colour.

Actual value of work: $35,000
Amount agreed to release to contractor upon completion of milestone:
90% of $35,000 = $31,500

Milestone #4: Fixtures, Electrical & Plumbing

Amount to release: $40,500
Scope of work: Contractor puts all bathroom fixtures and electrical in as well as ensure that they are working. All plumbing is in and working. Milestone will only be complete once fixtures, electrical and plumbing are all working.

Actual value of work: $45,000
Amount agreed to release to contractor upon completion of milestone:
90% of $45,000 = $40,500

Milestone #5: Final Payment

Amount to release: $14,500
Scope of work: Finishing touches are complete, project is complete.

Remaining Funds: $14,500