About the Contract
What Makes A Good Remodeling Contract?

A good contract is one which covers all the basics and makes an attempt to be clear and fair to all parties involved.

Clear and fair is particularly important when contracting with a property owner. In the event a contractor is sued, or faced with arbitration or some disciplinary action, others will be judging the contract as part of their determination. Will they see a written contract that is vague, less than complete, confusing or so one-sided that the contractor has an obvious unfair advantage?

Not only are there legal, ethical and moral reasons to strive for a professionally excellent contract, in the end, it just makes sense to be clear and fair. Who needs the hassle and grief that will come about from a confused, disgruntled homeowner?

The contractor's name, mailing address and telephone number should appear along with the name and address of the legal owner. There should also be the legal description of the property.

Then, the contractor should include a general description of the work to be done. This can be as general or as detailed as contractor and/or homeowner prefer. If pages of detail are outlined they should each be signed or initialed by the homeowner and attached to the final, formal contract. The contractor should note that plans, if any, are also attached. If the contractor prepared the plans or drawings, the homeowner should also initial such plans.

There should be an indication of items which are specifically excluded from the contractor's responsibility and are to be provided by the homeowner.

There should be a provision for allowances showing approximately how much is being allocated for appliances, light fixtures, bath accessories, floor covering, hardware finish and "other" and a brief definition of what that means.

The contract must include an approximate starting date and completion date. There should be a provision in the fine print that explains what can affect the start date and completion date.

The total price needs to be clearly listed along with the requirement for a down payment and payment schedule. There needs to be an explanation of how billings will be made and paid, homeowner releases and contractor's recourse for nonpayment.

Down Payment

State laws vary concerning the down payment. Generally, a down payment is about 10%. The down payment can be adjusted to allow for estimated start up costs which are the contractor's out-of-pocket expenses necessary to start the project.

Along those lines, a contract should include a notice to buyer that instructs them to carefully read the contract before signing and the consequences if the contract is canceled after the notice of cancellation has expired….the owner will be responsible for all expenses incurred to date by the contractor including the loss of reasonable profit.

Right above the signature line should be a notice of three business days to cancel the contract. Federal law requires a separate formal copy of the three-day Notice of Cancellation must be attached to mail back if they wish to cancel.

The fine print includes the terms and conditions. It is not made purposely to deceive but rather to include all the lengthy verbiage necessary to be fair and equitable to both parties. Remember, if the fine print is going to be used to confuse and give the contractor an unfair advantage, judges and lawyers will surely find such deceptions.

Every construction contract needs a provision to cover asbestos and hazardous materials. It should state that if a contractor discovers such materials the project stops until qualified removal experts come in and this is not included in the contract price.

There should be an explanation of the contractor's rights and responsibilities and limited warranty provisions.

Items not the responsibility of the contractor include any current code violations found, any delays for permits, weather, etc.

The owner's responsibilities should also be defined. Those deal with utilities, access to the property, financing, insurance, damages or destruction, personal property, agreement to record a notice of completion, boundary lines, easements and any required engineering or geology.

There should be a clause on drawings and specifications covering items excluded, measurements, debris removal, floor coverings, extra work, standards for specifications and corrective work.

A wise provision to include would be one that deals with disputes. If an arbitration clause is included certain legal wording is required and it must be initialed by the customer to activate the arbitration requirement.