So, you’ve decided it’s time to bring your home ownership dream to life. You’ve chosen your home design and layout and have an experienced contractor ready to start the work. The last thing you need to handle is signing the construction contract so the work can begin. No one seems to enjoy spending hours reading the fine print in those long, boring documents. Don’t make the mistake of signing a home building contract before you review every detail and understand what’s contained in the contract. Here are the important provisions in a home building contract.
The Scope of Work
A construction contract is important as it reflects the understanding between you and the contractor, ensuring that all your needs are met even as the contractor gets paid for the job. Your contract should, therefore, describe in detail the work the contractor is expected to and have agreed perform. Ensuring this is written will prevent any confusion or misunderstanding during the construction process. The contractor’s work often includes complying with all existing project plans and building codes, obtaining permits, and furnishing the labor and materials.
“Time is of the Essence” Clause
It’s important that you protect yourself against your building project going off schedule. The only way to do so is to ensure your home building contract clearly states the commencement date, the schedule of work that must be followed, and the target completion date. Unforeseen circumstances such as labor strikes, poor weather, inspection delays and other issues can affect the schedule in some cases. This may warrant an extension of time but the contractor should have a clear plan on how to keep project on schedule.
Payment Terms
Your contract must clearly state the progress payment method and schedule to avoid building disputes following disagreements with payments. How much, when, and how will you pay your contractor? There needs to be a steady stream of money to the contractor so they can build your home in a timely manner, without interruptions.
Termination Clause
Don’t assume that everything will play out well. Either of the contractual parties may feel the need to discontinue or rather end their obligations under the agreement. But they have to do it by mutual consent. The contract should have a termination clause, therefore.
Dispute Resolution Clause
No matter how friendly a contractor may seem or how careful the contractual parties are in drafting the contract, disputes may arise. You don’t want to end up in court every time there’s a small dispute. This clause should state the dispute resolution methods the parties may use in case of a conflict. Whether litigation, arbitration, adjudication, or meditation, make sure a dispute resolution clause is incorporated in your contract.
Changes to Scope of Work
At times the permitting authorities may require that some changes be made in the scope of work after the construction has begun. You may also decide to make some chances. It’s, therefore, important that the home building contract accounts for such possibilities by requiring written work orders that both you and the contractor sign.
Your contract should also contain express warranties, cost estimates, the indemnity clause, and no damage for delay clause. Take time to read and review the above provisions and terms so you can be confident and secure in regards to your construction project.