Offer request and contract for renovation work

It is advisable to establish your right to financial assistance before starting the renovation work. You may be eligible, for example, for

• subsidies granted for renovating housing for the elderly and handicapped
• tax credit for household expenses, if the renovation company is registered in the prepayment register maintained by the Finnish Tax Administration. Information on whether a company is registered in the prepayment register is available on the shared company information system maintained by the Finnish Patent and Registration Office and the Tax Administration.

Renewing the tile work in a small bathroom or polishing parquet flooring constitute small-scale renovation projects. In renovation projects valued at a few hundred euros, a verbal offer from the renovation company may be enough. But before starting work, it is important to make a contract in written to avoid future disputes.

More extensive projects, such as structural repairs to a single-family house, renovating heating systems or having a yard paved, are economically significant. For them, it is good to have offer requests in written too.

It is advisable to request tenders from several companies. This will help you gain information on the price levels and on the reliability of the entrepreneurs.

Offer requests should always be made in writing. In large projects, failure to provide a written offer should already be enough to raise questions concerning the reliability of the company in question. The responses should also be requested in written too.

The offer request should include at least

• a description of the required work
• a request for a price estimate and the charging principles
• a preliminary schedule
• the deadline for submitting offers
• a confirmation that the the construction contractor or renovator is in the prepayment register to ensure eligibility for tax credit for domestic costs.

It is advisable to meet the renovation service provider in person before concluding the contract. A good renovation company is often easiest to find based on recommendations from friends and acquaintances. If the company provides you with references, follow up on them by contacting the previous customers.

It’s worth noting that you take a significant risk

if you select a renovation entrepreneur who has “allegedly worked for my neighbor’s cousin at some point”, if you fail to agree on the final price or the completion time in writing, and if you pay for the renovation work in cash without receiving an appropriate receipt.  Disputes are very hard to solve in these situations when there is hardly any written proof of what has been agreed and paid.

The easiest way to proceed is to choose a service provider who is registered as a sole trader. The provisions of the Consumer Protection Act apply only to contracts between a consumer and a sole trader.

If a household hires a renovator, thus establishing an employment relationship, the household becomes the employer.

A household that hires a renovation company in an employment relationship is liable to pay the same employer fees as other employers. The Consumer Protection Act cannot be invoked in the case of defective or delayed work. Similarly, the consumer protection authorities cannot resolve any disputes.

A written agreement prevents potential disputes. If the contract is oral, there is no written proof to hold the renovation company to the agreed price or schedule.

The agreement must indicate at least

• the content of the work
• the price of the work, the charging principles and a schedule for the instalments
• the type and quality of materials
• who is responsible for purchasing the materials
• any arrangements and procedures made by the customer, such as demolition work existing structures
• the start time of the work and the deadline by which the work is completed
• consequences in case the work is delayed
• information on possible subcontractors.

If necessary, use the FCCA’s agreement template for small-scale renovation work.

In more extensive projects, it is advisable to ensure that the contractor’s agreement templates and terms and conditions are approved by the Consumer Ombudsman. If so, the terms and conditions are in accordance with the Consumer Protection Act and the approval of the Consumer Ombudsman is mentioned.

• General terms and conditions of special work in the building sector (HVAC, electrical installation, waterproofing, roof work and paint jobs) REYS-8 1995
• General conditions of consumer contracts on building sector work, the agreement form and tender form with attachments RYS-9 1998
• General terms and conditions of consumer sales of joinery products and the general terms and conditions of the associated installation work
• General terms and conditions of consumer sales and installation of house packages and elements
• General terms and conditions of log house packages and log products.

If there are several operators involved in a renovation project – such as an electrician, plumber and painter in addition to the main contractor – the agreement should be prepared carefully. For example, remodelling a kitchen is a project that usually requires a plumber and an electrician in addition to the persons installing the fixtures.

A written agreement is usually made only with the main contractor, but they may ask an “electrician or plumber they know” to carry out minor installations needed at the work site. It is advisable to state the name and business information of all those working on the site in the renovation agreement, even if the work they do is included in the price of the main contract.

The main contractor is responsible for the work done by the subcontractors. If, for example, the customer discovers a defect in the work done by a subcontractor but can no longer reach the main contractor, the customer also has the right to file a complaint directly with the subcontractor.

The most commonly used charging principles in renovation projects are hourly pricing and piecework rates.
In case of hourly pricing, you can request an estimate of the time needed for the work and include the estimate in the contract. The hourly prices must be indicated with additional charges and taxes.

Piecework rates are fixed contract prices that constitute the maximum budget which the contractor is not allowed to exceed. The charging principles for any unexpected additional work should also be included in the contract.

A cost estimate is an estimate that may be exceeded by no more than 15 per cent, and only when it can be reasonably justified.
A maximum price is the upper limit for the project price. The contractor may not charge more, even if the work turns out to be more costly than estimated. The price may, however, be lowered in accordance with the amount of work performed or materials used.

According to the Land Use and Building Act, all construction projects that require a building permit must have a person in charge of the construction work, a site manager or construction supervisor. It is the duty of the site manager to ensure that the construction work is carried out in accordance with the permit granted, the relevant provisions and regulations concerning construction, and good construction practice.

Even if the planned renovation work would not require the use of a supervisor, hiring one may still be justified. You should consider hiring a supervisor if the renovation project is extensive or if you do not have the necessary competence or possibilities to oversee the quality of the renovation work. The renovation company (contractor) is responsible for carrying out the work, and the task of the supervisor is to act as an external construction specialist and ensure that the work is carried out correctly.

You can check with your municipal building supervision authority whether or not the renovation work you are planning requires a building permit.

As a general rule, no advance payments should be made for renovation work. The safest option is to agree that the invoices will not be paid until the agreed work has been completed and approved. All advance payments involve risks to the consumer. In the worst case scenario, the contractor may take the money and disappear.

If you agree to pay for the renovation work in instalments, the payments should be scheduled so that most payments are made towards the end of the project. This way, the payments follow the progress of the work. This approach also helps to promote the customer’s right to withhold payment for defective work until the defect in question has been appropriately rectified.

If the contractor complies with the terms and conditions approved by the Consumer Ombudsman, an advance payment may be agreed upon in some cases. In such cases, the terms and conditions must be clearly stated in the written agreement.

It is advisable to agree on any additional work and the applied charging principles in written. This serves the best interests of both the consumer and the entrepreneur.

It is quite common in renovation projects – and especially when renovating older buildings – to encounter surprises for which even professionals are not prepared.

The contractor must agree on the completion of unexpected additional work with the customer. The contractor may not perform any additional work and charge the customer for the work without the customer’s consent. If the consumer wants to add extra work or make changes to the agreed plan during the project, they must also be prepared to pay for the alterations.

The time frame for completing the work must be established in advance in the written contract. The customer has the right to claim compensation for delayed completion of renovation work. The agreement should include a provision on compensation for possible delays. If you do not agree on a completion time in written, it is difficult to prove that the work is overdue.

If you want to carry out work related to the renovation project yourself, such as dismantling fixtures, you should also agree on a precise timetable for such work. This helps you to avoid disputes over which party is faulty, if the renovation work is delayed.

The level of compensation to be paid for delays should be set high enough, so that it genuinely prevents delays. The consequences of delays may be established, for example, as follows: xx % of the total price / each new week OR xx euros / each new week.