The new home renovation tax credit has many people considering hiring a contractor this year. You're eligible for a 15 percent tax credit on up to $10,000 dollars of work. But when it comes to hiring a contractor - beware.

Isabel Romaro has been trying to get her basement renovated for a year and a half. She's had major problems with a renovator, not once, but twice! She hired her first contractor in October 2007. She paid him five thousand dollars to start the job and not long after he wanted the rest of the money up front.

"Then he said he needed another $5,000, and then another and then another...then what happened? He disappeared," Isabel explains.

Isabel took the contractor to small claims court and won a judgment of $10,000- but she has yet to receive a penny. She hired another renovator to finish the job. He too demanded money up front and while she was reluctant to pay - she did, in installments and eventually also handed him $20,000. He did some of the work in the beginning - but eventually didn't show up.

To protect yourself, be willing to say no. The housing boom is over and contractors aren't as busy, they can't demand big deposits up front anymore. Here are some other pointers for writing up a contract with your contractor:

  • Build in a payment schedule
  • Pay as work is completed
  • Hold largest part for final payment.
  • And before you choose a contractor:
  • Get names from people you trust
  • Check names with the Better Business Bureau
  • Get two or three quotes
  • Check references

And don't hire someone who comes to your door saying "I'm just doing work in the neighbourhood." That's not a reference. Canada Revenue Agency has a link on how to hire a contractor that may also help.

In case your wonder what happened to Isabel. The second contractor she hired had previously spent 35 days in jail under consumer protection legislation for taking money for renovations and then not doing the work. He was unavailable for comment. Isabel's basement is now being completed by family and friends.

But really, the best defense is to be very careful who you hire in the first place.

With a report by CTV British Columbia's Chris Olsen