Unpaid Suppliers and Subcontractors
What happens if your contractor doesn't pay his or her suppliers and subcontractors? That depends on whether or not you have a signed contract, that includes legally proscribed payment holdback procedures for you to follow.
When you hire a contractor, your contract should specify that a specific amount of money (usually 10 to 15%) must be held back from all payments made to the contractor for a specific length of time (usually 30 to 45 days after the work is completed) as outlined in provincial lien legislation.
This legislation is designed to protect the financial interests of suppliers and subcontractors involved in construction work. If you adhere to the procedures set out in your province’s lien legislation, your financial liability is limited. With a cash deal, nothing is written down and it's unlikely that you have this protection.
For details on lien legislation in your province, and what you need to do to comply with these, contact your province’s Consumer Affairs office, or your lawyer.