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Contracts and money

Questions to Ask Before Signing a Building Contract

The specific questions worth asking, why each one matters, and what a good answer sounds like.

The short answer

Before signing, establish six things in writing: the contract form and how price changes, the complete allowance schedule, what is excluded, the payment and holdback schedule, the completion date and what happens if it slips, and the deficiency and warranty process at possession.

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A custom building contract is the most significant private agreement most people ever sign, and it is routinely reviewed with less care than a car lease. These are the questions that determine what actually happens when the project meets reality.

1. What is the contract form, and how can the price change?

  • Is this fixed price, cost-plus, or cost-plus with a guaranteed maximum price?
  • Under exactly which circumstances can the contract price increase without my written approval?
  • Is there an escalation clause for material or labour cost increases, and if so what triggers it and is it capped?
  • If this is cost-plus, what is the fee — a percentage or a fixed amount — and is it charged on change orders as well?
  • What documentation will I receive substantiating costs, and how often?

2. What is in the allowance schedule?

Allowances are the most common source of the gap between the contract price and the final cost. A quote with thin allowances is not a cheaper house; it is the same house with the decisions and the money deferred.

  • May I have the complete allowance schedule, itemised by category rather than as a lump sum?
  • Are these supply-only or supplied-and-installed figures?
  • Where did these numbers come from, and can you show me what they buy at your suppliers?
  • What happens to the difference if I come in under an allowance?
  • Are the design and selection hours to spend these allowances included, or billed separately?
The allowance test

Ask the builder to take you to their tile supplier and show you what the tile allowance actually buys, in the quantity your house needs. Ten minutes at a supplier tells you more about whether an allowance is realistic than any amount of discussion.

3. What is excluded?

  • Landscaping, driveway, fencing, retaining walls and final grading
  • Window coverings, audio-visual, security and home automation
  • Appliances, and whether the allowance covers installation
  • Design and engineering fees, permit fees, development levies
  • Utility connections, service upgrades and meter installations
  • Site servicing on an acreage — well, sewage system, utility extensions, approach
  • GST, and whether the quoted price includes it
  • Construction insurance, and who carries builder’s risk coverage during construction

4. What is the payment schedule?

  • What is the deposit, when is it due, and is it held in trust?
  • What are the draw stages, and are they tied to work completed or to dates?
  • Who inspects before each draw is released?
  • What holdback applies under provincial construction lien or prompt payment legislation, and how is it released?
  • Does my construction lender’s draw schedule align with the builder’s, and if not who carries the gap?

A payment schedule meaningfully ahead of work performed transfers risk to you. On any project, the amount paid should track the value in place plus a reasonable mobilisation, not lead it substantially.

5. What is the completion date, and what if it slips?

  • Is there a contractual completion date, or only an estimate?
  • What are the permitted extensions — weather, supply, change orders, force majeure — and how are they documented?
  • Is there any remedy if the date is missed by a substantial margin?
  • What is your current workload, and how many other homes will be under construction at the same time as mine?
  • Who is the site supervisor on my project, and how many homes do they carry?

6. What happens at possession?

  • What is the pre-possession walkthrough process, and who attends?
  • How is the deficiency list recorded and what is the timeline for closing items out?
  • Is any amount held back until deficiencies are complete?
  • Which warranty provider covers this home, and when will you send me proof of enrolment for this address?
  • What is your own warranty service process after possession, and who do I call?
  • What documentation do I receive — as-builts, manuals, commissioning reports, warranty certificates, lien declarations?

Have a lawyer read it

A construction lawyer reviewing a residential building contract is inexpensive relative to the contract value and relative to what a dispute costs. Do it before signing rather than after a problem, and choose someone who does construction work specifically rather than general conveyancing.

Common questions

Questions

Can I negotiate a builder’s standard contract?

Often, though how much depends on the builder and the market. Allowance amounts, the payment schedule, the change order process and deficiency holdbacks are all commonly negotiable. A builder who will not discuss any term at all is giving you information about how the rest of the project will go.

Should I use a standard industry contract form?

Standard forms — including those published by the Canadian Construction Documents Committee and provincial home builders’ associations — are generally more balanced than a builder’s own paper, because they were drafted by committees representing both sides. If a builder proposes their own form, that is normal, but it is a reason to have it reviewed rather than a reason to refuse.

What deposit is reasonable?

It varies by market and project. The principle that matters more than the number is whether the money is protected — held in trust, secured, or covered by the warranty programme’s deposit protection where one applies. Ask what protects your deposit if the builder fails, and get the answer in writing.

Sources
  1. Alberta Prompt Payment and Construction Lien Act — consulted August 6, 2026
  2. Canadian Construction Documents Committee — standard contract forms — consulted August 6, 2026
  3. Canadian Home Builders’ Association — contracts and warranties — consulted August 6, 2026

External sources are cited so you can check them. Regulations change; confirm anything you intend to rely on with the issuing authority directly.

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Independent verification required. Nothing on this site is a recommendation, endorsement, warranty or professional advice. Editorial selection is not a substitute for your own due diligence. Before you sign anything, independently verify a builder’s licensing, insurance, warranty enrolment, financial standing, references and contract terms, and obtain your own legal, financial and construction advice.
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Understanding Cost-Plus and Fixed-Price Building ContractsA fixed-price contract sets one price for a defined scope, with the builder carrying the estimating risk. A cost-plus contract bills actual costs plus a fee, with the client carrying that risk. A guaranteed maximum price is cost-plus with a ceiling, and is usually the most balanced of the three for custom work.Custom Home Allowances and Change OrdersAn allowance is a placeholder sum in the contract for an item not yet selected. A change order is a written amendment altering scope, price or schedule after signing. Together they account for most of the gap between a contract price and a final cost on custom homes.How to Choose a Custom Home BuilderChoose a custom home builder by verifying the checkable facts first — licensing, warranty enrolment, insurance and financial standing — then by assessing fit: whether their documented work matches your site type, your design ambition and your budget discipline. Reference calls with recent clients tell you more than a portfolio does.
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