Have you ever received multiple bids for a remodeling project, only to find that the length and detail in each bid varies greatly?  Have you noticed that some contractors overload you with paperwork such as material lists, legal sounding forms, and contracts to sign, while others … sometimes the lowest bidders … have submitted their bid on one page?  If they all seem trustworthy, but you are not sure if you feel comfortable conducting business on a one-page document … your instincts are correct!

When it comes to hiring a contractor and signing a contract, it is important to make sure your home and finances are protected.   Each contractor presents their bid in a different manner indicating what they will be doing and how much it will cost.  There is much variability in what is included and how they are written, and yes … some contractors are more detailed than others.  Beware of contracts that are brief … too little information leaves a lot to be interpreted … or misinterpreted.

A contract should be written using simple language to avoid any confusion.  Characteristics and specific information recommended to be included in any remodeling contract are as follows:

Project Scope and Specifications
Ensure all contractors bidding on your job are bidding off the same information. The scope of work should be very specific as to the remodeling you want done.  It should include drawings and dimensions, the kinds of materials to be used, brand names, colors, grades, styles, and model numbers.  A brief bid leaves too much room for interpretation, and you have nothing to protect yourself in the event the contractor does not construct what you had in mind.

Building Permits
Whoever obtains the permits is required to ensure that the work meets all building codes.  The contractor should be the one to obtain the permits so that they are responsible for the work. 

Starting and Completion Date
Construction delays are to be expected, however they should be limited.  A general statement establishing a starting and completion date while allowing for reasonable delays should be included in any contract…as well as the consequences.

Change Order Clause
A change order clause requires that all changes be in writing to protect all parties involved.  Any changes made to the contract must be approved and signed by both you and your contractor.

Names of Subcontractors and Suppliers
The contract should include the names of all subcontractors and material suppliers so you can obtain lien waivers indicating all subcontractors and material suppliers have been paid before you issue final payment to the contractor.  This will protect you from any action against you by the contractor, subcontractors or suppliers.

Schedule of Payments
Avoid any contractor who requires a large percentage of the payment up front.  It is customary to make a “good faith” down payment of a small percentage of the total job and set up a payment schedule based on completed stages of the project.  The total project price or how the price will be calculated should also be clearly defined in the contract. 

Holdback Clause
This states that final payment will be withheld until sometime after job completion. This will allow you time to inspect the work, provide an incentive for the contractor to remedy any problems, and obtain lien waivers from the contractor indicating all sub-contractors and suppliers have been paid.

Cleanup 
Construction and remodeling projects make a huge mess!  Be sure to establish who will do the cleaning, how often, and to what level of cleanliness. 

Home Warranties
Ask your contractor to provide you with a written warranty for their labor and the materials used to complete your project.  This will protect you if the work performed begins to fail after the contractor has received final payment.

This is a list of the basics that should be included in a contract; there are many other items that can be included, depending on the type and size of job.  If your contractor is not incorporating these items, you may want to take it upon yourself to ensure the following issues are documented and signed by both parties.  And if you have any questions regarding your interest, you may want to have an attorney review the contract before you sign anything.

Remember, ultimately the contractor works for you, you are the boss!  Do not sign anything until you are absolutely comfortable with the contractor and that the terms of the contract are meeting your needs. 

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