Questions to Ask Before Signing a Custom Home Contract

Table of Contents

• Builder Credentials and Professional Standing
• Understanding the Scope of Work and Custom Home Building Contract Checklist
• Custom Home Contract Allowances and Exclusions
• Custom Home Construction Payment Schedule and Financial Terms
  • Holdback and statutory protection
  • Lien waivers and payment verification
  • Payment methods and disputes
• Managing the Custom Home Change Order Process
• Project Timeline, Communication, and Delays
  • Start date, milestones, and substantial completion
  • Who owns the delay
  • Schedule protections and remedies
  • Communication and site access
• Warranty, Deficiencies, and Final Protections
• Frequently Asked Questions

Last Updated: October 17, 2026

Builder Credentials and Professional Standing

Before you sign a custom home contract, verify your builder’s credentials, many homeowners skip this background check.

Ask for the builder’s license number and verification status, in most provinces, residential builders must be licensed.

Insurance is non-negotiable.

Ask for references from completed custom homes.

Check online reviews on local business directories and Google. Look for patterns.

At Mario Laflamme Contracting & Renovation Ltd, we believe transparency about credentials builds trust.

Understanding the Scope of Work and Custom Home Building Contract Checklist

The scope of work is the most important section of your custom home contract.

Your custom home contract should list every detail: square footage, bedrooms and bathrooms, foundation type, roofing material, siding, interior finishes, appliances, flooring, paint colors, and fixture brands.

Ask the builder to walk you through the scope line by line. Point out anything that’s unclear.

Create a detailed checklist as you review the custom home contract:

• Foundation specifications (concrete slab, basement, crawlspace)
• Framing (wood frame, steel, engineered lumber)
• Roof type and material (asphalt shingles, metal, slate)
• Exterior walls (siding type, brick, stone, color)
• Windows and doors (brand, energy rating, style)
• Interior walls (drywall, plaster, soundproofing)

Ask what’s not included, landscaping, driveway paving, deck construction, interior decorating. Knowing what’s excluded prevents misunderstandings later.

Custom Home Contract Allowances and Exclusions

Allowances are dollar amounts set aside for items you’ll select later; exclusions are things the builder won’t do at all.

A typical allowance might be: “Kitchen appliances: $8,000 allowance.” If you pick appliances costing $12,000, you pay the $4,000 difference.

Ask the builder to list every allowance in writing. Common allowances include:

• Kitchen appliances
• Bathroom fixtures (faucets, toilets, tubs, showers)
• Lighting fixtures
• Flooring materials
• Interior paint and stain
• Exterior landscaping
• Deck or patio materials

For each allowance, confirm whether unused amounts are refunded or kept by the builder. Get this in writing.

Exclusions matter equally.

Knowing the exclusions lets you budget for what you’ll hire separately, like landscaping or driveway paving.

Custom Home Construction Payment Schedule and Financial Terms

Your custom home construction payment schedule determines when you pay and how much, and it’s where disputes often start. Get it in writing and treat it as a negotiated term, not a formality.

A typical payment structure might look like this:

Ask what triggers each payment. “Foundation complete” is vague, poured concrete, a passed inspection, or ready to frame? Tie every trigger to a verifiable event like a passed inspection or signed-off stage, not a calendar date or verbal assurance.

Holdback and statutory protection

Holdback is crucial. In most provinces, construction and lien legislation requires the owner to hold back a percentage of the contract price, commonly 10%, for a defined period after substantial performance or completion.

Never agree to pay 100% before the final inspection and walkthrough. Confirm in writing:

• The holdback percentage and the exact date it is released
• Whether the holdback period runs from substantial completion or from the date the builder publishes a notice of completion (the rules differ by province)
• Whether the builder will provide a certificate of completion or equivalent document before you release holdback

If the builder asks you to release holdback early “to help cash flow,” that is a red flag. Early release removes your leverage and your statutory protection at the same time.

Lien waivers and payment verification

A lien waiver is a legal document confirming the builder has paid subcontractors and suppliers for work covered by a progress payment. Request a conditional waiver with each progress payment and an unconditional one once it clears; it should identify the project, payment amount, and period covered.

Before releasing any progress payment:

• Ask for a current list of subcontractors and suppliers on the job
• Request lien waivers from the major trades (framing, electrical, plumbing, HVAC, drywall) for completed work
• Confirm the builder’s payments to those trades are current, waivers signed by the trades are stronger than one signed by the builder
• Keep a payment log of date, amount, milestone, and waivers received

This is the single most effective way to avoid a lien being registered against your home after you have paid the builder in full.

Payment methods and disputes

Ask about payment methods, bank transfers, certified cheques, and their policy if you need to delay a payment because a milestone isn’t actually complete.

Build a dispute mechanism into the contract before you sign. A workable clause lets you withhold the disputed amount (not the whole payment) in good faith while the undisputed portion is paid, with the dispute going to a named process, mediation, then arbitration, or expert determination.

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Confirm whether the contract is fixed-price or cost-plus, because the pricing model changes what the payment schedule protects.

Managing the Custom Home Change Order Process

Change orders are written requests to change the scope of work, materials, or timeline. They’re inevitable in custom home building.

A change order should specify:

• What’s being changed (be specific, don’t just say “upgrade kitchen”)
• The cost of the change (labour and materials broken down)
• The impact on the timeline (does this delay completion?)
• Approval signature from both you and the builder

Ask how the builder handles change orders. Some charge a fee just to process the request, get that in writing.

Establish a process before construction starts. For example:

• Changes under $500 can be approved verbally but documented in writing within 48 hours
• Changes between $500 and $2,000 require written approval before work starts
• Changes over $2,000 require a formal change order with 24 hours’ notice

This prevents disputes about what was or wasn’t approved.

In a cost-plus contract, you pay actual costs plus a markup (often 10-20%). In a fixed-price contract, the builder quotes a total price and absorbs overruns.

Project Timeline, Communication, and Delays

Your custom home contract should specify a start date and target completion date, but delays happen, weather, supply shortages, permit delays, and inspections can all push the timeline. The real question is whether the contract allocates responsibility for delay and gives you a remedy when the date slips.

Start date, milestones, and substantial completion

A single completion date is weak protection. Ask for a milestone schedule attached to the contract: site start, foundation complete, framing complete, weathertight, rough-in complete, drywall, final inspection, and substantial completion, each with a target date and defined trigger, the same way payment milestones do.

Distinguish between the completion date and substantial completion, the point at which the home is usable for its intended purpose, even if minor deficiencies remain.

Who owns the delay

Delay responsibility should be allocated by cause:

• Builder-controlled delay, labor shortages, scheduling errors, subcontractor no-shows, rework. The builder should bear the cost and the schedule consequence.
• Owner-controlled delay, late selections, late approvals, requested changes, financing delays. You should bear the cost, and the builder should be entitled to a time extension.
• Neutral or excusable delay, severe weather, strikes, supply-chain failures, permit delays outside the builder’s control, force majeure. The builder typically gets a time extension but not additional cost, and only if the builder gives written notice within a stated period.

The notice requirement matters. A well-drafted clause says the builder must notify you in writing within a set number of days of becoming aware of a delay, state the cause and expected impact, and request a specific extension. Without it, the builder can claim any delay was excusable long after the fact.

Schedule protections and remedies

Ask the builder what happens if they miss the completion date. Options include:

• Liquidated damages, a fixed amount per day after the target completion date (for example, a stated daily amount tied to your carrying costs such as rent, storage, or interim financing). This compensates you for delay without requiring you to prove your loss.
• Holdback extension, the holdback release date is pushed back day for day until substantial completion.
• Termination right, if the builder misses the completion date by more than a stated number of days for builder-controlled reasons, you may terminate and complete the work with another contractor, with the cost difference charged against the builder.
• Bonus for early completion, less common, but some owners negotiate a modest bonus for early substantial completion.

Liquidated damages must be a genuine pre-estimate of your loss, not a penalty. A clause that punishes the builder disproportionately may not be enforceable, so keep the daily amount tied to a real cost you can document.

Communication and site access

Establish a communication schedule in the contract, not just in conversation: weekly site visits, weekly written updates, or a shared project management platform?

Ask about site access, can you visit whenever you want, or only at scheduled times? Some builders restrict access for safety and insurance reasons. Confirm the policy before construction starts, and that any restriction still lets you verify progress before releasing each progress payment.

Warranty, Deficiencies, and Final Protections

Your warranty protects you if something goes wrong after you move in.

Most builders offer:

• One-year warranty on labour and materials
• Two-year warranty on major systems (roof, foundation, HVAC)
• Five to ten-year warranty on structural defects (depending on province)

Ask whether the warranty is transferable if you sell the home.

Ask about the deficiency resolution process. How quickly does the builder respond to warranty claims?

Request a lien waiver from the builder before you make the final payment.

Ask about professional inspections.

A custom home contract is a complex legal document.