The bigger the renovation, the more important it is to have a remodeling contract, as it keeps the costs and the project itself on track. Without one, it's quite difficult to ensure that you and the contractor are on the same page. A remodeling contract provides key information for both the homeowner and the contractor, such as the time frame, the permits required, the materials needed, and the overall project cost.
Want to ensure you have all your bases covered? Here's everything that needs to go into your remodeling contract.
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1. Complete Project Description
Every home improvement contract should thoroughly describe the scope of the project at hand so there are no questions. For instance, if you expect the remodeler to apply a specific paint to walls, but the contract just says "paint the walls," that portion of the job may not be completed to your expectations.
Any work specifications that are not in the completed contract — even if you verbally discussed it before the contract was signed — might result in an unsatisfactory completion or added charges to complete the job as you intended. The complete scope of work should cover which room or structure the project includes as well as fine details, such as filling in nail holes, caulking windows or caulking around a new tub, and applying a specific number of paint coats to a remodeled room's walls.
For projects that require numerous and specific materials or that involve a lot of changes, the construction contract should go into detail about the actual materials used as well as the installation methods and locations. Changes to wiring or plumbing should spell out exactly where the changes occur, such as adding new outlets at ground and counter height on the kitchen wall to the left of the sink.
2. Materials and Costs
Materials and costs are important to cover, especially if you've personally selected particular materials, such as backsplash tiles, kitchen lighting, a quality kitchen faucet, and a specific type and color of hardwood flooring. For such materials, the information should be listed by name and/or product number, the quantity required, and the total price.
If you aren't sure which kitchen fixtures you want, at least specify a general type and grade, such as midrange in price. Ensure the contractor provides an actual product list and price as well as pictures of the items or mockups showing them in place in your home. Product literature or an actual sample of the suggested material helps ensure you get what you want, especially when it comes to fixture and hardware finishes as well as wall tile, paint, and flooring types and colors.
Be wary of allowances, which are set budgets for specific types of materials in your contract, such as faucets or lighting. While an allowance gives an estimate for expected product costs, it doesn't indicate the quality of the item, so you may end up with a budget-grade product when you actually expected a higher quality.
3. License, Insurance, and Contact Information
A licensed contractor should have proof of licensing and display that information on all written paperwork. The contract should include the license number and proof that it's current. Also make sure the contract includes proof that the contractor carries all necessary forms of insurance, such as workers' compensation and general liability insurance.
A thorough contract includes contact information for both the contractor and the homeowner. Read through this to ensure all information is correct. The contractor's information should contain one or more phone numbers so the contractor can be reached during nonproject hours. It should also include a physical business address. All of this information is important in the event of a dispute.
Your own contact information should include your name and address spelled correctly as well as the best phone number or contact method to reach you to discuss the project, schedule, or payments.
4. Subcontractor Details and Payments
Many jobs include the use of subcontractors chosen by the contractor. For instance, a new garage build often means a new concrete slab for the floor, which could require a separate concrete contractor. Any electricity or plumbing in the new structure may also require a licensed electrician or plumber. Full information about each subcontracting company, including license information and company or contractor name, should be in the contract.
Any remodeling contract listing subcontractors should also cover whether their labor and materials costs are included in the full project price or if you are expected to pay the subcontractors separately. Be sure this information is clearly spelled out to prevent any hefty unexpected expenses.
5. Remodeling Contract Payment Terms
The payment terms and the payment schedules must also be in the written contract. Since remodeling is often an expensive project, there's a good chance the contractor expects a percentage of the payment up front, and this amount should be listed in the contract. For an expensive and time-consuming project, the contract should have a list of progress payments, or draws, indicating at which point another payment is due and its cost. Besides your initial down payment, the first draw may be due when drywall goes up, and a second may be due when a new shower stall is framed in, for instance.
The progress payment or draw system is better than installments due biweekly or on a specific date each month, as your cash implies that the progress up to that point meets your satisfaction — all the way until you reach the final payment. It also helps keep the cash flowing to the contractor so they can purchase or pay themselves back for materials needed for the next phase of the project.
Never agree to paying off the total renovation cost early in the project or before it begins. Any unpaid amounts are incentive for the contractor to complete the job in a timely manner and as expected. Although it's unlikely to happen with legitimate, highly rated contractors, breaking things down into multiple payments rather than a large chunk up front helps prevent a contractor from taking your money and vanishing without finishing the job.
6. Liens and Lien Waivers
For expensive projects, a contractor may put a mechanic's lien against your property to ensure they are paid for their work. Subcontractors working on the project may also secure liens to ensure they get paid either by you or the general contractor. Lien waivers work a bit like receipts for payment and protect you, the general contractor, and the subcontractors.
Most of the time, the general contractor pays a subcontractor a specified amount for the subcontracted work at some point during the project. Upon payment, the subcontractor signs a lien waiver for the same amount, essentially agreeing that they can't place a lien against your property for that amount of money since they've already received payment. Your contract should include proof of lien waivers signed by every subcontractor on the job. If the general contractor placed a lien against your property, they should provide a signed lien waiver for the full payment amount once the project is completed and they've been paid in full.
7. Full Warranty Details
The contract should explain which portions of the work are covered under warranty, the length of the warranty, and who is responsible for repairs or replacement in the event that some of the new materials fail within the warranty period. For example, the contractor may work with an electrical subcontractor to add power to a new garage addition. If the new outlets don't work properly, the contract could state that the electrical subcontractor must make the warranted repairs. This information should cover how long the warranty lasts for each applicable portion of the project. The warranties should cover materials as well as workmanship.
8. Who Provides the Contract?
Expect an experienced contractor to supply the contract, as the company has access to customizable software capable of printing out materials lists, cost breakdowns, and all the crucial details required in a decent contract. A contractor who only does small jobs may have a less thorough contract if any at all. Make sure there is a contract signed by yourself and the contractor to help avoid disputes.
If the contractor doesn't provide the contract, it's OK to print one from a template website as long as the important information is covered. It's also possible to write up the information yourself provided that both you and the contractor sign off on it. If you are using a contract that has peculiar wording or if the contractor provides the paperwork for a huge project and some of the wording doesn't seem right, it's a good idea to have a lawyer review the contract or even draw up a new one for you.
9. Project Timeline
The remodeling contract spells out the full timeline of the project as well as when contractors start and finish each day or each week. This helps prevent being awoken on a Saturday morning when you didn't expect workers until afternoon. The most basic required information includes the projected start and end dates for the project. Naturally, project snags may extend the timeline, but this section should offer a reasonable estimate of the entire project timeline.
If part of the project involves specialty equipment or vehicles that may require driveway or yard access, this should be mentioned in general terms, such as a concrete mixer truck needing access to a driveway when it's time to pour the garage slab. Anything that may disrupt use of your yard, driveway, or part of your home should be mentioned clearly, including how long those areas will remain inaccessible.
10. Remodeling Permit Acquisition
The contract thoroughly spells out which types of permits are necessary to do the job as well as who is responsible for acquiring them. For instance, a garage renovation that changes the exterior size or adds windows most likely requires building permits and possibly a zoning variance. A good contractor who is familiar with your community should know local regulations and how to efficiently obtain the permits. Ideally, they will take care of this process for you since they know how it's done. The contract should be clear about permit responsibilities.
11. Change Order Details
A large-scale remodel may run into unexpected issues, such as electrical problems that require complete rewiring in the project area. Other possibilities are that you change your mind on a few minor details before that portion of the project begins or that a change must be made to meet the homeowners' association or local code requirements that come to light after signing the contract.
In any case, the contract should spell out what happens when changes are made. It should also require that any changes made to the original scope of the project are spelled out in writing and you personally sign off on the changes. This ensures that the project scope and price don't change without your knowledge. Changes that result in extra labor and materials costs should also detail the added expenses as well as the extra time required to meet the changes. Even if the change is minor and doesn't cost extra, such as deciding on a new paint color of the same type and brand before the contractor buys the paint, you should document the change and sign off on it.