What a Home Improvement / Remodeling Contract should Include
When it comes to what constitutes a good contract, there are certain key elements which should be included to avoid any misunderstanding or confusion, and some key points are:
- Full details of the contractor: name, address license and registration details etc.
- Proposed schedule of work indicating start date and anticipated finish date
- Schedule of payments
- Details of subcontractors that will be used
- Details of the scope of work that will be done
- Material specifications and equipment to be installed (do your preparation and be prepared to detail all equipment and brand names and specs)
- Removal and clean-up plan
- Terms of agreement
- Details of how any dispute will he handled
- Space for signatures of both parties
It’s a good idea to ask the contractor to provide, or include in the contract, a list of what is NOT included in what they are offering. This will clarify the contractor’s position and assumptions made such as that the existing wiring or plumbing system is in good order, or that you will be responsible for the removal of trash during the project, and similar details.
The contractor should be responsible for securing the necessary building permits and making sure that all work carried out complies with local building codes. It is often the case that the person who applies for the permit is liable for making sure that everything is done according to such building codes, so it’s better if the application is in the name of the contractor.
Schedule of payments
A deposit of around 10% is normally acceptable, unless there are any custom-made fixtures such as kitchen cabinets which are required to be fabricated, in which case the initial down-payment required may be more. The schedule of payments should detail when, or at what stage of the project, the next and subsequent payments will be made. Only make the final payment when you receive signed waivers or release documents from all subcontractors and suppliers. You don’t want to be faced with a claim on your property for work done or equipment supplied by a third-party in the event that the contractor didn’t pay them.
Make sure that your contractor agrees to resolve all problems immediately or as soon as possible, not at the end of the job. It’s generally easier to fix most problems as they occur and it will avoid being left hanging around just to get little things sorted out at the end while the contractor has maybe already moved onto their next big project. Withholding the last 10% of payment for a month after completing is not uncommon, just to make sure that no problems appear once the job is finished.
Contractor red flags
Finally, alarm bells should start going off in your head if you come across any of these:
- An unsolicited approach or visit from a contractor offering a bargain price
- A contractor whose address can’t be verified or has no listing in the local telephone directory
- Non affiliation with any trade association, lack of license or registration
- Insurance information that can’t be verified
- A contractor unable to give several references for similar work carried out in the area or region
- Talk of “demo discount” or when a contractor promises you a big discount if they can use your job as a reference, or demo, for other customers in the future
- Any sign of pressure to try and get you to commit to estimates/bids by offering discounts or talk of prices increasing soon.