A building contract between owner and builder ensures that you, as the homeowner, will get the house you're expecting and the contractor will get the payment they are entitled to receive.

Why Construction Contracts Are Important

When it comes to building contracts, at their most basic:

  • You want the house you were promised
  • The contractor wants to get paid for their work

The building contract is used to:

  • Reflect this mutual understanding
  • Make sure there are no misunderstands or disagreements before work commences
  • Provide a basic guide for both involved parties to follow in the event that problems arise

In most cases, the contractor you choose will provide a contract that covers all of these items and is ready for both parties to sign. If they don't you can either:

  • Work with the contractor to draft a contract
  • Hire an attorney to help you both draft the contract

In any case, you should never proceed without a valid contract in place. A very basic contract will likely not contain very many terms or details. On the other hand, a contract may be so detailed and complicated that it becomes difficult to understand. Neither case is ideal. To adequately protect the rights and interests of both involved parties, the contract's terms need to be:

  • Complete
  • Specific
  • Easy to understand

Common Construction Contract Issues and Disputes

Below, some of the most common disputes that arise in residential construction contracts are discussed. If any of these issues aren't covered in your construction contract, you should take steps to make sure they are added before the contractor begins working, if at all possible. If they are included, be sure to review each term thoroughly to make sure they adequately protect your rights and the contractor's rights.

The first important issue to consider is referred to as the "scope of work." This section of the contract should describe the work that the contractor has agreed to perform. This will normally include obtaining the required permits to complete the work as well as providing:

  • The labor necessary to do the work
  • The required equipment
  • Necessary equipment
  • Any other services pertaining to the completion of the job

The scope of work section should also require that the contractor conforms their work to the provided plans and specifications for the project. These should be included as a part of the overall contract. In some cases, even if the contract has been carefully drafted, there may be conflicting details in:

  • The building plans
  • Project specifications
  • The written portions of the contract

These conflicts can often lead to confusion and, ultimately, a disagreement. If the provided building plans, for example, show a master bathroom that has only one sink, but the project specifications state it should have two sinks, how do you go about deciding which one is correct? In anticipation of issues like this, you may want to consider specifying that, in the event that there is a conflict between the building plans and the project specifications, the specifications will override the plans. In addition, in any case of potential conflict, the contract should ultimately be considered the final authority.

While you might assume this is implied, it's still a good idea to make sure the contract specifically states that the contractor is expected to complete the job in good standing and a "workmanlike manner" while staying in compliance with any applicable laws. Doing so will help to prevent any potential issues with the contractor's performance on the job. You'll be able to point to specific provisions in the contract that they have breached and, if it becomes necessary, use these terms to pursue legal action.

The next section you should make sure your contract includes is called the "timing of the work." You've likely heard or experienced a horror story in the past about a building project that's gotten off schedule. How do you go about protecting yourself if this happens? You need to make sure your contract includes details regarding:

  • When the project is to begin
  • The work schedule the contractor is expected to follow
  • When the project is expected to end and you can move into your new home

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