Remodeling Contracts that Protect both Contractor and Homeowner
Long gone are the days where palm-spitting and handshakes would seal a business deal. We now live in an increasingly litigious society and all parties involved in a construction or home remodeling project must protect themselves legally, especially when the construction funding budget is considerable.
Elements of the Builder-Owner Construction Contract
The accepted bid precedes the actual construction contract. While the major points of the signed bid are total cost and the scope of the work to be performed, the actual contract touches on the details of the job at a much deeper degree of granularity. Gold Coast renovation builders are always ready to provide you renovation services.
Most reputable builders use a standard boilerplate form that they are familiar with, but the homeowner must be sure that a number of topics are spelled out specifically. It’s always a good idea for the property owner to have an attorney go over it. Following are some standard items that should be included.
Description of Work to be Performed
This description should go the level of detail that the scope of the project demands. For example, there is a huge difference between repairing drywall holes, matching texture, and repainting, as compared to the job of a room addition.
The brand of materials to be used may be spelled out in this section as well. If you want energy efficient replacement windows and pay for them in the construction bid, that’s what you should get, not contractor-grade window frames and glass.
Construction Funding and the Schedule of Payments
This section should outline relevant information regarding the entity providing the construction funding whether it’s the homeowner, a bank, a credit union, or another financial establishment. At a minimum, it should mention company (or individual) name, physical address, and contact.
The schedule of payments is very important. In the trade, these payments are called “draws” and are basically funds paid for percentage of work completed. In many cases, the draw is contingent on city inspectors signing off on the building permit. It doesn’t apply to all trades, but you can almost bet on it for electrical and plumbing work, and any HVAC tasks that involve refrigerant charging or refrigerant recovery.
Workers Compensation, Contractors Liability Insurance, and Bonding
These types of construction insurance should have been verified during the process of selecting a bid, but this is where you nail it down in writing. It should spell out the amount of coverage and the company through whom the insurance is purchased. It’s important to financially protect the homeowner from worker’s injury lawsuits and mechanics liens.
Terms and Conditions
This section is where the legal verbiage hits its stride. Usually a number-bulleted list, it lays out the legal details of the sections listed above. It might also touch on the procedure to follow if any litigation occurs, what happens if either party goes bankrupt, and anything else that hasn’t been covered already.
If care is taken drawing up this contract, both the real estate builder and homeowner should have a minimally bumpy remodeling experience.
