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Home Building Contract

When working with building professionals, you should make sure a number of important points are outlined in a written agreement. This will help prevent misunderstandings and disagreements and will serve as a backup if a dispute should arise.  This is called a home building contract.

A contractor may propose a "time and materials" contract instead of a fixed-price contract. "Time and materials" means that the contractor charges his fees based on his time (day works) plus a small percentage of the cost of materials.

A home building contract is a legal agreement that obligates the people who sign it to perform specific acts. Note the word "specific." Make sure that any contract you sign spells out exactly what you expect of the work from any professional you hire. Following are some of the elements you should include within your home building contract:

Start and finish dates. You may want to include the phrase '"time is of the essence," which may give you added leverage if a delay leads to a dispute.

The right to settle disputes by arbitration. In the event of a dispute, arbitration can often be speedier and less costly than a court proceeding.

A warranty of at least one year on all work and materials. Most new homes require a contractor to warranty his or her work for at least 10 years and is insurance backed and tghis should be stated clearly within the home building contract.

A payment schedule. No matter how highly recommended a contractor comes, it is important to provide continual incentives for completing work—and to protect yourself from someone who might disappear with your money—by phasing payments. Check with your contractors board for recommended practices. If speed is important, you may want to include a late penalty clause and/or a bonus for early completion.  However a liquidted damages clause within the home building contract may be more appropriate.

Detailed job and materials descriptions. After deciding on materials, clearly state those choices in your home building contract. If you want flooring made of 4-inch-wide No. 2 maple, put it in writing. Be sure that contractual allowances will cover the cabinets, fixtures, appliances, and materials you want.

If amendments, or "change orders," are made along the way, make sure the documents are initialed by both parties before any new materials are purchased or work has begun.

NOTE - These are general discussion articles only.


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