4 Crucial Things Every Home Renovation Contract Must Include

by Bob Hummer 09/28/2021

Professionals bring the commercial-grade tools and years of experience to deliver the quality upgrades people desire. Although you and your contractor may work in different industries, written agreements help clarify the duties and expectations.

One of the pitfalls of enlisting a contractor comes from miscommunication. This can lead to disagreements about the scope, details, and costs. By including the following things in your home renovation contract, you can ensure everyone is on the same page.

1: Renovation Project Description

A construction contract should always include a detailed description of the project. It's also wise to note every duty the contractor agrees to perform. When the project description identifies the following items and others specific to the work, disputes can be avoided.

      • Materials: The specific materials should be identified in the agreement.
    • Products: Dimensions, brands and quality of product considerations should be indicated in writing.
    • Tasks: Each facet of the project you expect the construction company to complete should be spelled out. Don't assume the contractor will do the demolition work unless it is outlined in the contract.
    • Permitting: Building permits typically cost money. Make sure you're clear about who pays those fees and secures the permits.
    • Debris: Construction debris typically cannot be disposed of in the weekly trash pickup. Include who will handle this phase including transportation to a landfill.

    2: Payment Schedule

    Many contractors won't begin a job before you pay a deposit. That money may go toward start-up expenses or materials. It's not unusual for construction professionals to work a deal in which they charge for labor and the homeowners put materials and products on their account. This can sometimes cause confusion over total payment amounts. Make sure your contract includes these details to avoid confusion and more serious ramifications.

    3: A Clause That Waives Liens

    What happens if a worker claims they were not paid despite the fact you fulfilled your financial obligations? While uncommon, this situation can happen unless you include a "lien waiver" in your contract. This process uses invoices that indicate all crew members were paid from the previous disbursement. Once the contractor signs it, you can rest easier with this legal protection in place.

    4: Consider An Exit Strategy

    Sometimes homeowners and contractors discover they don't work well together. If this issue arises, a smartly crafted renovation contract allows the property owner to void the agreement without penalty. This section should outline how much the contractor gets paid based on completed work, materials and labor. Having an exit strategy could also prove useful if you suffer a financial shortfall and cannot afford to move forward.

    Although some people feel that contracts are based on mistrust, they are an essential part of the construction business. Honest and well-meaning people sometimes miscommunicate or make assumptions the other person might not. A well-thought-out renovation contract helps good people remain friends when the job is done.

About the Author
Author

Bob Hummer

Bob Hummer brings a wealth of experience with him; a practitioner in real estate in Northern Virginia since 1978, a Life Member of both the Million Dollar Sales Club and the Top Producers Club with over 1,500 Satisfied Families and President, Prince William Association of REALTORS in 1991. His experiences range from helping buyers and sellers attain their goals; to renovating historic homes on Capitol Hill; to counseling and assisting homeowners facing the loss of their home due to foreclosure. Since 1996, he has presented his free monthly Home Buyer and Home Seller seminars at the Woodbridge campus of Strayer University. A former "Military Brat" and a retired Air Force Hospital Administrator; Bob has made more than 25 moves during his life and is extremely familiar with all aspects of a family relocating - whether it is across the street or across the nation.