Contracts for Building...the Do's and Don'ts
As homeowners, we are constantly working to maintain and update our homes. Sometimes this requires help from professional contractors because we don't have the time, desire or resources to get the job done ourselves. We've all heard horror stories about hiring contractors to do work. So what kinds of things must be included in a contract to protect yourself?
Potential Problems When Hiring
Here is a list of things that can happen when hiring people to do work on your home. These should help you think about what items to include in your contract when hiring.
- No Show - a company starts work on your home and then doesn't finish
- Accident - a worker gets hurt while working on your home opening you up to liability issues
- Material Argument - after hiring a company, they demand you pay for material when you thought it was included
- Payment Dispute - half way through the job the company asks for 50% payment but you only want to pay when work is 100% done
- Bad Workmanship - your new roof leaks eleven months after installation and the roofing company doesn't want to come back
The First Step...Have a Contract
Believe it or not, many homeowners have work done on their home without a contract. These are the same people that will complain that things didn't go just right. A contract helps both you and the people working for you as it communicates the details of all expectations from both parties involved. So the first step to wellness, in this case anyway, is to have a contract agreement signed by both parties.
Important Contract Elements
Here are some of the major items that should be included in your contracts to build, remodel and repair your home. This is not a comprehensive list, just those that have can create major headaches for you.
- Project Location
- Parties Involved (both you and the company to be hired)
- Detailed Description of Work to be Done (along with details on who is supplying materials, tools...etc)
- Dollar Amount (along with payment details...like when is payment to be made)
- Changes (what if you or the contractor needs to make a change after starting)
- Schedule (when is work to be started and completed and what happens if it doesn't)
- Insurance Required (detailing the types of coverage, amounts, insurance company and agent)
- Warranty (what is covered and how long)
- Safety (the contractor should be responsible for following OSHA regulations and procedures when working on your home)
Using The Contractor's Agreement
Most contractors have an agreement they use on a regular basis. They have had an attorney create this contract to protect them...not necessarily you. As a home builder, I require all companies working for me to use my standard agreement. This agreement is written to protect both parties.
If you are building a new home as an owner builder, you should have an attorney create a generic contract to be used with each and every company that will help build your new home. This is worth the cost as it can be used with fifty or more trades and suppliers that you will hire.
If you are only using one contractor to repair or remodel a part of your home, it probably doesn't make sense to have a new contract drafted for you. In this case, have your attorney review the contract from the company you are hiring prior to signing.
You should have your attorney review any contracts prior to signing them. If you are wondering whether this extra cost is necessary, don't. You've heard a few of the horror stories...don't become one of them.
As a builder, I have built, remodeled and repaired several thousand homes over the years. So trust me when I say, be sure to have a detailed contract whenever hiring a company to do work on your home. Whether your plans are to build your own home or remodel your existing place, a detailed agreement will help you avoid extra costs and hassles. Things can, and will, go wrong with just about any type of project so you want to make sure you are protected when they do. For more details, stop by and see our owner builder resources page.