The Contractor’s Agreement for Building a New Home

Any time that you hire a quality contractor or builder to build a home, or perform any other kind of renovation, you will be required to sign an agreement / contract. Signing any kind of agreement can be intimidating, and the longer and more involved the contract is, the more stressful it may be to sign it. However, you do not have to allow the contractor to be control of every aspect of the agreement. It is called an agreement for a reason. That is because both parties should agree to the terms as an instrument of protection for every one involved.

The Contractor’s Version

In a perfect world, you would author your very own contract to meet your desires and remain within the boundaries of your comfort zone. However, it is standard operating procedure that your contractor will request that you must sign his agreement. While using an agreement that was penned with the contractor’s good in mind may be necessary, that doesn’t mean that you can not alter that agreement. Do not just blindly sign the agreement that the builder hands you without thoroughly reviewing it. A good builder will not have a problem with you keeping the agreement for a period of time for review.

Basically, you have a right to strike any clauses that you are uncomfortable with, for example, "The owner agrees to pay any increases in labor or material costs which may come into effect after signature of the agreement". You may also make additions, most likely in the manner of an addendum to the contract. Should you be unclear as to the meaning of any phrases or wording, use wisdom and consult with an solicitor.

What should be covered by the Contractor’s Agreement?

While a contractor’s agreement may have clauses and phrases that you prefer to delete, there are items that you will want covered in the agreement. Let’s look at some of them:

1. The scope of work that will be handled by the contractor, with anything that is not covered by the general contractor agreement very specifically laid out. This will make up a good section of a contractor’s agreement.
2. The payment schedule should be detailed and explicitly express whether the monies will be paid to the contractor by the owner or the financing institute, and upon what conditions.
3. Any change orders that occur during the progress of the project, and exactly how they will be handled.
4. Security.
5. Ownership of material.
6. Denote what constitutes interference and how it will affect the contract.
7. Define what will lead to mediation, jurisdiction, and arbitration, and exactly how it will be resolved. This manner of grievance resolution is much less costly than ending up in court; however court should be a last resort.

While signing any kind of contract can be a daunting task, you should know what to expect and have some idea what is not acceptable to you. Don’t hesitate to pay a few dollars to have a lawyer review and advise you regarding the contents of your builder’s agreement. It could save you thousands, not to mention headaches, in the long run.