Article originally posted on kiplinger.com on November 17th, 2022
If you’re planning a home update, addition or another project, make sure you and the contractor agree on some key terms, and put them in writing in a contract. Don’t just sign the contract your remodeler gives you without carefully reading and understanding each provision. Ask a knowledgeable friend or hire a lawyer to review it if you’re confused.
Scope of work
The heart of the contract is a description of what type of renovation work will be performed. The more detail, the better chance the homeowner has of getting the desired final product,
Look for a start date and end date for the project. It’s fine for those to be tied to a milestone, such as a permit being granted. For instance, the contractor promises to start work within 30 days of acquiring a permit. That said, work may be delayed for reasons outside the contractor’s control, such as a supply chain delay. Therefore, your contract should spell out what constitutes an excusable delay and under what conditions it’s likely.
Cost should be understood by everyone
Your contract should include an estimated total price for the work. Most home remodeling contracts are fixed cost, meaning the contractor bears the risk of performing all the work for that amount. The alternative is a materials-plus-labor, or time-plus-materials, contract, in which you bear the risk of having to pay more.
Take a hard look at the size and timing of the proposed draws in your contract. The checks you write to your contractor should be tied to milestones in the project, with the percentage of money you’ve paid roughly keeping pace with the amount of work the contractor has performed: what they’ve spent on materials and labor.
Materials and allowances
Another crucial provision in the contract: spelling out the specific materials to be used, the quantity, and the products to be ordered. Include as much detail as possible, such as brands, model numbers, and acceptable alternatives.
Change Order Process
Even the best contract can’t anticipate every possible development in a renovation project. You might discover unexpected problems inside your walls once they’re opened up. Or perhaps you have a late inspiration for a tweak on the design. You should specify how change orders will be handled.
The contract primarily addresses the remodeler’s obligations and how you will pay. But you should also be aware of your commitments and risks in signing the contract. Some contracts require certain access to the site, valuables to be put away or a specified level of homeowners insurance. Make sure it’s clear who bears the responsibility for any damage to the property and what consequences ensue.
How disputes will be resolved
A contract may also require arbitration or mediation as an alternative to a lawsuit.
Finally, your contract should include the remodeler’s contact person, address, license number and bond or insurance information. But it’s not enough to see a license number on the contract. Check with your state to be sure the contractor’s license is in good standing and covers the type of work to be completed. Ask for a copy of the insurance certificate to be sure it’s valid and check both the Better Business Bureau and several references from prior customers.
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