Typically, remodeling contracts include a highly detailed scope of work and cost breakdown. They also typically include lien waivers, which prevent a contractor from placing liens on the home for unpaid labor or materials.
It should also stipulate start and finish dates, along with target completion targets for important phases of the job. It should also state who is responsible for procuring licenses and permits, while respecting codes and zoning laws.
The Scope of Work
A scope of work is an important document in a renovation project. It sets the expectations for the job and helps minimize misunderstandings throughout the process. Homeowners and contractors should create a document together that clearly lays out the stipulations for the project. It’s also useful for determining how to handle unexpected challenges, such as water damage or a hidden electrical problem.
The scope should include a task list, the contractor’s responsibilities and deliverables, and any other specific requirements such as licensing, insurance, permits, or inspections. It should also describe how much the job is expected to cost and provide a payment schedule based on the completion of various project milestones.
The contract should also include a section that specifies the materials and products to be used for the project. This helps avoid misunderstandings when reviewing the project plans, drawings and product selections. It should also state that any proposed changes to the product selections must be approved by both parties before implementation.
The Payment Schedule
A contractor payment schedule is an important part of a home renovation contract. It helps ensure contractors get paid on time and also allows them to keep tabs on their cash flow throughout the project.
This is important because builders can sometimes become tangled up in payments due to a variety of reasons including delayed client approval, the delivery of customer-provided fixtures and other issues beyond their control. The schedule should be clear and specific. For example, the builder might want a percentage payment of the total project cost tied to a project milestone such as rough plumbing and electric being completed or wallboard and trim being installed.
It is also a good idea to include reasons that the homeowner can terminate the contract without penalty through the use of a termination clause such as a lack of communication or poor quality work. Additionally, it is important to include a lien waiver so that the homeowner can be protected from subcontractors claiming a mechanics lien on their property for non-payment.
The Warranty
Most reputable builders will include a warranty for their work. This is a good idea because it gives homeowners peace of mind in case something goes wrong. But it’s important to read the fine print and understand what is covered.
The length of the warranties can vary, and some types of repairs are excluded by certain policies. Make sure to find out if the builder is going to be responsible for product failures or if it’s up to the manufacturers. Also, be sure to keep records of all correspondence with the company to avoid disputes in the future.
Lastly, be sure the contract includes a lien waiver. Without this, any contractor that fails to pay for materials or labor can file a mechanics lien against your property. This can delay your project and complicate the payment process. Ask your builder to provide this before starting the work. It may also be required by your state’s consumer protection laws.
The Inspections
Unless you are doing a small, cosmetic job that doesn’t require permits, any legitimate home remodel or renovation will have building department inspections of the framing, plumbing and electrical work. A licensed contractor will have each stage of the rework inspected and signed off by the building inspector.
This process is not just to check for compliance with codes, but also to identify problems that could later lead to expensive repair bills. For example, if you have wood-destroying insect infestation, water or roof damage or structural issues, it is best to address these as early as possible rather than wait until they are more costly to fix.
Your remodeling contract should stipulate that any payments you make are tied to the completion of specific stages of the project and that a home inspector will evaluate the work to ensure it is up to code. This will protect you against contractors who cut corners, take shortcuts and use substandard materials to save on costs, making future repairs more costly.