Building Contractor Agreement

08 Mar Building Contractor Agreement

Construction and remodeling contracts consist of detailed plans and lists of terms that answer the “who, what, and when” of the project. These elements should be present and easily understood by all parties:

• Architectural drawings
• Specifications for material types and labor standards
• Payment terms and schedule
• Progress schedule, and how delays affect payment and other terms
• Change orders (how additions and substitutions will be handled)
• How and when subcontractors will be paid
• Information about licenses, insurance, business names and addresses, etc.

Tips for a Successful, Comfortable Agreement

Materials may go out of stock, or thunderstorms can delay construction for a week. The best way to avoid drama: set terms in the contract to address all reasonable circumstances. Most importantly, you should feel comfortable that the contract explains in detail the nature of the work and how and when you will make payments.

Understand the possible contract types. Fixed price contracts are the most straightforward, with the side effect of making numerous change orders costly. Your building contractor may prefer a time and materials contract or a cost plus fee contract, which tie costs to labor and materials plus profit.

A building contractor offering a fixed price might have baked in plenty of profit, so there’s a chance that a T&M or cost-plus job may actually cost less — provided that the scope of the work is clearly defined and you work with a highly professional building contractor.

Details protect both parties. Unspecified requests are a common cause for concern. The building contractor needs to know as many details as possible upfront to prevent the need for change orders and cost changes.

Define “substantial completion.” Final payments are typically due within a certain number of days after substantial completion of the project. Agree with your building contractor ahead of time about what this entails.

Make sure subcontractors get paid. An unscrupulous contractor may neglect to pay a subcontractor. That person can then claim a mechanic’s lien on the property which forces the homeowner to pay the subcontractor. Address subcontractor payments in the building contractor agreement so you are not liable.

Agree on dispute resolution. Arbitration, rather than court trials, is common for a building contractor agreement. The state of California has a arbitration guide online to help and give information on this process. Make sure you understand how any attorney fees or arbitration costs will be paid.

Do I Need to Consult with a Lawyer?

Attorney’s fees are the only drawback to getting legal advice. If you are comfortable with the building contractor agreement after researching the terms, this may not be necessary. You may consider the cost of hiring a lawyer to review and re-draft the contract to be worth it for your peace of mind, especially for larger remodeling jobs or full home construction.

Before You Sign a Building Contractor Agreement

When you have chosen the best contractor for the job and agreed on the terms, take one final moment to review everything. Make sure you have seen the contractor’s insurance, verified licenses, and investigated the contractor with the BBB and their references.

Finally, speak up and request any desired changes to the contract before signing — it is easier and less costly to rewrite terms before the project begins.

Contact us at McNeil Construction for information about our services. We build new homes, restore historic homes, and offer remodeling services in the San Francisco area.