It would be nice to be able to trust your contractor’s word when you’re having work done on your home, but a written contract really is the only way to go. Having everything in writing can ensure that every party involved fully and clearly understands what is expected of them. It keeps the job running smoothly and ensures that everyone agrees on what should be done and when.
A written contract with all pertinent details will also protect you should you ever have to seek compensation for a job that was not done as promised. Be sure that your contract includes all of the following elements before you sign on the dotted line.
1. Detailed Description of the Job
Before any contract becomes binding, make sure that it lists in detail all of the specific tasks involved in the project, the materials that will be required, and the associated costs with each.
The contract should also specify that the contractor will apply for and obtain all of the required building permits to legally and safely carry out all the tasks, and that all debris from the demolition will be disposed of appropriately. In addition, make sure the contract specifies that all workers involved are covered by liability and workman’s compensation insurance.
2. How Payments Will Be Made
Obviously, the contract should include the total price for the work involved. But it should also detail exactly when increment payments should be made, how much each payment should be, and how you should be paying the contractor. Usually, an initial deposit is required, which should not be any more than 10% of the entire cost of the project.
Then, further installments will be paid after each milestone has been reached, such as after the drywall has been installed, after the flooring has been laid, and after the kitchen cabinets have gone up. The last portion of the final payment should only be provided after the job has been fully completed to your discretion.
3. Start and End Dates of the Project
You’ll both want to know when the job will be started and roughly when it will be completed in order for you to fit it into your schedules. The end date shouldn’t exactly be written in stone to allow for certain unexpected circumstances; however, it shouldn’t be so far off the original completion date, either. Be sure that these dates are written into the contract.
4. How Changes to the Project Will Be Dealt With
It’s common for home renovation projects to encounter unforeseen situations that can warrant some changes to the original plan. It’s important to anticipate such scenarios, and have a plan in place on how to deal with them.
It should be noted that no changes should take place until the contractor has received written approval from you. Only then should a “change order” take place, which outlines what changes need to be made and any associated costs.
5. Lien Waivers
Various workers who come onto your property to do work – including plumbers, electricians, drywall tapers, painters, etc – can claim that any work they did on your home was never paid for, even if your contractor did indeed receive payment for the work.
Having a “lien waiver” written into your contract for every installment payment made can protect you from these individuals placing a lien on your property. Every invoice for every payment made should include a signed statement proving that any payments you made to your contractor were in fact used to pay off all the workers involved.
6. Written Notice of Your Right to Cancel Without Penalty
You may have entered a contract with a contractor to have certain work done on your home, but what if you change your mind at the last minute? What if something comes up that derails your plans for a home renovation?
Luckily, you can back out of your contract without any penalty within three business days of signing it. Having an “escape clause” included in the contact means you can cancel the deal within three days without losing your deposit.
7. Warranty
Having a warranty for all the work done in your home will provide you with reimbursement should something go wrong with the workmanship. Usually, these warranties are for no less than one year. Make sure the name and address of the person or company who will honor the warranty are included in the contract, along with the exact date that the warranty starts and ends.
8. Signatures
This may sound obvious, but make sure both you and the contractor sign the contract. It won’t be legally binding without these signatures.
The Bottom Line
Your contact is a crucial element to any home renovation job. It makes sure that each party holds up their ends of the bargain, and protects all parties involved, especially you. Make sure your contact includes all of these elements in order to protect you from any shady behavior from your contractor, and provide you with some recourse should you be defrauded in any way.
